United States District Court—Northern District of 
Nem York 


THE State OF NEw YorRK AND CHARLES | 
D. Newron, Personally and as Attorney 
General of the State of New York, 

Plaintiffs 

VS. 

| 


Tue Unitep States and Encar E. Criark, 
CuHarRLEs C. McCuorp, Batruasar H. 
Meyer, Henry C. Hatt, Winturor M. 
DANIELS, CLtyDE B. AcHESON, ROBERT 
i. Wouuey, Josepy B. Hastman, HENRY 
J. Forp and Marxk W. Porter, constitu- 
ting THe INTERSTATE COMMERCE Com- 
MISSION. 

Defendants 


PETITION AND BILL OF COMPLAINT AND ORDER TO 
SHOW CAUSE 


Epwarp G. GRIFFIN, 
Deputy Attorney General of New York, 
Solicitor for the Plaintiffs, 
Office and Post Office Address, 
The Capitol, Albany, N. Y. 


‘ 
f 


ate ar f Ota! 
ral Jean ? 
Path ‘i ai, uy 


IN THE 
DISTRICT. COURT OF THE UNITED 
STATES — 


NORTHERN DISTRICT OF NEW YORK. 


Tse State or New York and 
Cuarues D. Newron, Personally 
and as ATTORNEY-GENERAL OF 
THE STATE or New York, 

Plaintiff's, 


agaist 


Tue Unrrep States and Enaar 
HK. Cuarx, Cuaries C. McCuorp, 
BauttTuasar H. Meyer, Henry C. 
Haut, Winturop M. Danizts, 
Crype B. Acueson, Rosertr FE. 
Wottey, JosepH B. Hasrman, mh es 
Henry J. Forp and Marx W. 
Porter, Constituting Tur Iv- 
TERSTATE COMMERCE ComMISSION, 
Defendants. 


PETITION AND BILL OF COMPLAINT 


To the Honorable the Judges of the District ® 
Court of the Umted States for the Northern 
District of New York: 


The State of New York, Charles D. Newton, per- 
sonally and as Attorney-General of the State of 


cbietateer ee 
a r 
iSjers 
oN 


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A 
Complaint 
New York, bring this Bill of Complaint against 
the United States and the Interstate Commerce 
Commission and respectfully show unto this Hon- 
orable Court and allege as follows: 


1. That the plaintiff, the State of New York, 
is one of the States of the United States, and 
Charles D. Newton is Attorney-General of the 
State of New York, duly qualified and acting as 
such, and is a citizen of the State of New York 


-and the United States, and have legal capacity to 


sue herein as will be made to more particularly 
appear with all other necessary allegations of 
jurisdictional facts that can hereinafter be more 
conveniently and precisely pleaded. The United 
States is made a party defendant herein by virtue 
of the authority and requirements of the Act of 
October 22, 1913, (38 State L. 219) and known as 
the District Court Act and because the Inter- 
state Commerce Commission, defendant herein, 
claims to have derived its authority for the uncon- 
stitutional and illegal acts committed by said 
Interstate Commerce Commission, and herein- 
after complained of from said defendant, the 
United States, and because the unconstitutional _ 
statutes hereinafter complained of were enacted 
pursuant to the authority of said defendant, the 
United States. 'The Interstate ‘Commerce Com- 
mission, a defendant herein, is a regulatory body 
over common carriers engaged in interstate com- 
merece established and existing under an Act of 
Congress known as the Interstate Commerce Act 
and consists of the following persons with their 


D 


Complaint 
residences as nearly as complainants can ascer- 
tain: 


Edgar IX. Clark, residing in the State of Iowa. 

Charles C. McChord, residing in the State of 
Kentucky. 

Balthasar H. Meyer, residing in the State of 
Wisconsin. 

Henry C. Hall, residing in the State of Colo- 
rado. | 

Winthrop M. Daniels, residing in the State of 
New Jersey. 

Clyde B. Acheson, residing in the State of 
Oregon. 

Robert W. Wooley, residing in the State of 
Virginia. 

Joseph B. Eastman, residing in the State of 
Massachusetts. 

Henry J. Ford, residing in the State of New 
Jersey. : 

Mark W. Potter, residing in the State of New 
York. 

2. That this suit involves questions arising 
under the Constitution and Laws of the United 
States and is a case in which a State is a party 
and in which the United States and officers thereof 
are defendants as will be made to appear more 


particularly herein, and the amount involved in | 


the controversy as to each of the parties is in 
excess of $3,000 exclusive of interest and costs. 
- 3. That on or about the 28th day of December, 
1917, the President of the United States took 
possession and control of the steam railroads 
operating as common carriers within the State 


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; Complaint 
of New York under the war powers pursuant to 
authority conferred by Congress. 

4. That prior to May 28, 1918, the said common 
carriers had filed, published and put into effect 
certain schedules of fares, rates and charges 
which were then and had been demanded and col- 
lected by said common carriers for the transpor- 
tation of passengers, milk and cream, excess bag- 
gage and space in sleeping and parlor cars in 
accordance with the laws and constitution of the 
State of New York as made and provided. 

5. That on or about the 28th day of May, 1918, 
the Director General of Railroads of the United 
States of America in disregard of the laws and 
constitution of the State of New York, but pur- 
suant to the authority conferred upon him by Con- 
gress under the war powers authorized said 
common carriers to increase in certain respects 
the rates, fares and charges in effect as aforesaid 
for the transportation of passengers and com- 
modities generally within the State of New York 
in intrastate traffic. 

6. That pursuant to and in accordance with said 
authorization the said common carriers increased 
their fares and charges for the transportation of 
passengers and commodities in intrastate traffic 
within the State of New York. 

7. That on or about the Ist day of March, 1920, 
the United States of America relinquished the 
possession, control and operation of said common 
carriers, but by statute provided that no rate, 
fare or charge then in effect should be reduced 
by or under the laws of the State of New York 
prior to the 1st day of September, 1920, without 


7 


Complaint 
the consent of the Interstate Commerce Commis- 
sion. 

8. That on September 1, 1920, the laws and 
constitution of the State of New York in respect 
to the rates, fares and charges of said common 
carriers engaged in intrastate commerce within 
the State of New York again became effective, 
but said common earriers, continued to demand 
and collect the rates and charges previously au- 
thorized by the Director General of Railroads un- 
til November 29, 1920. 

9. That on the 29th day of July, 1920, the Inter- 
state 'Commerce Commission, defendant herein, in 
a proceeding known as Ex Parte 74, 58 I. C. C. 
220, authorized within a region that includes the 
State of New York an increase of 40 per centum 
in the interstate freight rates, 20 per centum in the 
interstate passenger fares, baggage charges and 
rates for milk and cream and also a surcharge of 
50 per centum of the charge for space in sleeping 
and parlor cars in interstate carriage to accrue 
to said steam railroads operating as common 
carriers within the State of New York and else- 
where. 

10. That thereafter the said steam railroads 
operating within the State of New York as com- 
mon carriers made informal application to the 
Public Service Commission, Second District of 


the State of New York, a regulatory body of the 


State of New York having general jurisdiction 
over common carriers engaged in intrastate com- 
merce, for permission to file effective on five days’ 
notice tariff supplements providing increases in 


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Complaint 
the rates, fares and charges applicable to intra- 
state traffic within the State of New York and 
corresponding to those authorized for interstate 
traffic by the Interstate Commerce Commission 
as aforesaid. , 

11. That so far as said application to said 
Public Service Commission related to the trans- 
portation of freight, except milk and cream, it 
was granted by said Public Service Commission 
by an order duly entered the 19th day of August, 
1920, but so far as said application related to the 
transportation of passengers in intrastate com-— 
merce it was denied by order of the same date, as 
will more fully appear by true and complete 
copies of said order and the opinion of said Pub- 
lic Service Commission which are attached 
hereto, made a part hereof as if pleaded herein 
and marked ‘‘ papers 1 and 2.’’ 

12. That thereafter a few of the steam railroads 
serving the State of New York as common ¢ar- 
riers filed with the Interstate Commerce Com- 
mission a petition, which was received by said 
Commission, pretending to act under authority of 
the Laws of the United States, as will more fully 
appear from a true and complete copy of said pe- 
tition which is attached hereto, made a part hereof 
as if pleaded herein and marked ‘‘ paper 3.’’ 

13. That thereafter by order made on the 8th 
day of September, 1920, the Interstate Com- 
merce Commission, pretending to act under au- 
thority of the Laws of the United States, set a 
hearing upon said petition before one Mr. Wilbur 
La Roe, Jr., Chief Examiner of said Interstate 
Commerce Commission, on its behalf in the City 


Hy) 


Complaint 
of New York on the 13th day of September, 1920, 
and said hearing was held as will more fully ap- 
pear from a true and complete copy of the steno- 
graphic minutes of said hearing which are at- 
tached hereto, made a part hereof as if pleaded 
herein and marked ‘‘ paper 4.’’ 

14. That the State of New York, through its 
Governor, was duly notified by the Interstate 
Commerce Commission of such hearing as by the 
statute of the Unted States made and provided 
and the State of New York formally and duly ap- 
peared therein, as a party respondent, by its At- 
torney-General, Charles D. Newton, and objected 
to the jurisdiction of the Interstate Commerce 
Commission. 

15. That thereafter the hearing for argument 
was set by said Interstate Commerce Commission 
on the aforesaid record made before said La Roe 
and had before it, where said Commission pre- 
tended to act under the authority of the Laws of 
the United States, at its hearing room in the City 
of Washington, D. C., on the 11'th day of October, 
1920, at which time and place the State of New 
York, formally and duly attended by its Attorney- 
General as a respondent therein and objected to 
the jurisdiction of the Interstate Commerce Com- 
mission. 

16. That thereafter the Interstate Commerce 
Commission, pretending to act under the author- 
ity of the Laws of the United States, on the 13th 
day of November, 1920, made its report, findings 
and orders on said petition, and among other 
things complained of herein set aside and declared 


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Complaint 

null and void the existing rates, fares and charges 
for intrastate commerce allowed railroads oper- 
ating as common carriers in the State of New 
York under the laws and constitution o fthe State 
of New York and under their charters and 
franchises conferred upon them by the State of 
New York, as will more fully appear by a true and 
complete copy of said report, findings and orders 
which are attached hereto, made a part hereof, as 
if pleaded herein, and marked ‘‘paper 9.’’ 

17. That thereafter the railroads operating 
within the State of New York in intrastate com- 
merce including some electric railways and which 
were joined in said order (with the exception of 
a few which are and had been defunct or have 
not and had no trackage in the State of New York, 
and do not and did not do any intrastate business 
in the State of New York) filed with the Inter- 
state Commerce ‘Commission certain tariffs and 
schedules increasing the rates, fares and charges 
for intrastate carriage as in said illegal and un- 
constitutional report, findings and orders of the 
Interstate Commerce Commission directed to be 
effective on the 29th day of November, 1920, and 
said Interstate Commerce Commission received 
them, pretending to act under the authority of the 
Laws of the United States. 

18. That said railroads are now demanding and 
collecting, or threaten to demand and collect, the 
increased fares, rates and charges directed by 
said illegal and unconstitutional order of the In- 


terstate Commerce Commission. 


19. That the New York ‘Central Railroad is a 
corporation organized and consolidated and doing 


iid 


Complaint 

business under the Laws of the State of New York 
and consists in part of a four track line running 
from the City of Albany to the City of Buffalo 
in the State of New York, chartered under a pri- 
vate law of the State of New York, and known as 
Laws of 1853, Chapter 76, duly enacted and pro- 
viding as follows: 


‘“LAWS OF NEW-YORK 
oy (GHAR st 60. 


‘* AN ACT to authorize the consolidation 
of certain railroad companies. 


‘* Passed April 2, 1853. 


‘“ The People of the State of New-York, 
represented in Senate and Assembly, do enact 
as follows: — 


‘* Section 1. The Albany and Schenectady, 
Schenectady and Troy, Utica and Schenec- 
tady, Syracuse and Utica, Rochester and 
Syracuse, the Buffalo and Lockport, the Mo- 
hawk Valley, and the Syracuse and Utica 
direct, Buffalo and Rochester, Rochester, 
Lockport and Niagara Falls Railroad Com- 
panies, or any two or more of them, are 
hereby authorized at any time to consolidate 
such companies into a single corporation, in 
the manner following: 

‘¢ 1. The directors of any two or more of 
such corporations may enter into an agree- 
ment, under their respective corporate seals, 
for the consolidation of the said corporations, 
prescribing the terms and conditions thereof, 
the mode of carrying the same into effect, the 
name of the new corporation, the number of 
directors thereof, which shall not be less than 
thirteen nor more than twenty-three, the time 


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Complaint 

and place of holding the first elections of di- 
rectors, the day for annual elections of di- 
rectors, the amount of capital, and the num- 
ber of shares of the stock of the new corpor- 
ations, which shall not be larger in amount 
than the aggregate amount of capital of the 
several companies thus consolidated, and 
shall not be increased, except in accordance . 
with the provisions of the act passed April 
second, eighteen hundred and fifty, the man- 
ner of converting the shares of capital stock 
in each of said corporations into the shares 
of such new corporation, the manner of pay- 
ing any shareholder that may decline taking 
shares in the new corporation, with such 
other details as they may deem necessary to 
embrace in such agreement, not inconsistent 
with the provisions of the act entitled ‘‘ An 
act to authorize the formation of railroad 
corporations and to regulate the same,’’ 
passed April second, eighteen hundred and 
fifty. 

‘¢ 2. Such agreement of the directors shall 
not be deemed to be the agreement of the said ~ 
corporations so proposing to consolidate, 
until after it has been submitted to the stock- 
holders of each of said corporations respect- 
ively separately, at a meeting thereof to be 
called upon a notice of at least thirty days, 
specifying the time and place of such meet- 
ing and the object thereof, to be addressed to 
each of such stockholders, when their place 
of residence is known to the secretary and 
deposited in the post-office, and published for 
at least three successive weeks in the state 
paper, and in one of the newspapers printed 
in each of the counties through or into which 
the railroad of the said corporation shall ex- 
tend, and has been sanctioned and approved 
by such stockholders by the vote of at least 
two-thirds in amount of the stockholders: 


13 


Complaint 

present at such meetings respectively, voting 
by ballot in regard to such agreement either 
in person or by proxy, each share of such 
capital stock being entitled to one vote; and 
when such agreement of the directors has 
been sanctioned and approved by each of the 
meetings of the respective stockholders sep- 
arately, after being submitted to such meet- 
ings in the manner above mentioned, then 
such agreement of the directors shall be 
deemed to be the agreement of the said sev- 
eral corporations, and a sworn copy of the 
proceedings of such meetings, made by the 
secretaries thereof respectively, and attached 
to the said agreement, shall be evidence of the 
holding and of the action of such meeting's in 
the premises. 

‘¢ Section 2. Upon the making of the said 
agreement mentioned in the preceding sec- 
tion in the manner required therein, and filing 
a duplicate or counterpart thereof in the 
office of the secretary of state, and immedi- 
ately upon and after the first election of di- 
rectors of said corporation, the said corpor- 
ation shall be merged in the new corporation 
provided for in the said agreement, to be 
known by the corporate name therein men- 
tioned, and the details of such agreement 
shall be carried into effect as provided 
therein, only such new corporation shall not 
have any larger powers than are granted by 
the act entitled ‘‘ An act to authorize the for- 
mation of railroad companies and to regulate 
the same,’’ passed April second eighteen hun- 
dred and fifty, or be exempt from the per- 
formance of any duty which the said several 
corporations may be liable to perform, ex- 
cept as herein provided. 

‘¢ Section 3. Such new corporatisn shall pos- 
sess the general powers, and be subject to the 


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Complaint 

general liabilities and restrictions expressed 
in the third title of the eighteenth chapter of 
the first part of the Revised Statutes; 11 shall 
also have the general powers and privileges, 
and be subjected to the general liabilities, re- 
strictions, duties and provisions expressed 
and contained in the said act entitled ‘An 
act to authorize the formation of railroad 
corporations and to regulate the same,’ 
passed April second eighteen hundred and 
fifty, and the acts amending the same, so far 
as the same are applicable to a railroad cor- 
poration, where a railroad is constructed and 
put in operation. 

‘¢ Section 4. Upon the election of the first 
board of directors of the said new corpora- 
tion created by the agreement of the several 
companies, all and singular the rights, fran- 
chises and interests of the said several cor- 
porations so consolidated, in and to every 
species of property real, personal and mixed, 
the things in action thereunto belonging, shall 
be deemed to be transferred to and vested in 
such new corporation, without any other deed 
or transfer; and such new corporation shall 
hold and enjoy the same, together with the 
rights of way, and all other rights of prop- 
erty, franchises and interests, in the same 
manner and to the same extent as if the said 
several corporations so consolidated should 
have continued to retain the title and transact 
the business of such corporation ;and the title 
and real estate acquired by either of the said 
corporations shall not be deemed to revert, or 
be impaired by means of such act of consgoli- 
dation, or anything relating thereto. 

‘* Section 5. The rights of creditors of any 
corporations that shall be consolidated, shall 
not in any manner be impaired by any act of 
consolidation, nor shall any liability or cbli- 


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Complaint 

gation for the payment of any money now due 
or hereafter to become due to this state, or 
any individual, or any claim or demand for 
damages for any act done, or neglect suffered 
by any such corporation, be in the manner re- 
leased or impaired, but such new corporation 
is declared to succeed to such obligations and 
liabilities, and to be held liable to pay and dis- 
charge all the debts and liabilities of each of 
the corporations that shall be so consolidated, 
whether on contract, or for misconduct or 
neglect, either to this state or to individuals, 
and it shall be liable to have an action brought 
against it to enforce the payment of any 
money or damages, or the performance of 
any duty which any corporation consolidated 
into such new corporation was liable to pay 
or perform, in the same manner as if such 
new corporation had itself incurred the obli- 
gation or liability to pay such money or dam- 
ages, or perform such duty; and no svit, ac- 
tion or other proceeding now pending before 
any court or tribunal in which any railroad 
company that may be so consolidated is a 
party, shall be deemed to have abated or dis- 
continued, by reason of any such agreement 
of consolidation; but the same may be prose- 
cuted to final judgment in the same manner 
as if the said corporation had not entered into 
such agreement of consolidation, or the said 
new corporation may be substituted as a 
party in the place of any corporation of 
whick it shall be composed, by order of the 
court in which such action, suit or proceeding 
may be pending. 

‘¢ Section 6. If any stockholder shall, at 
said meeting of stockholders, or within 
twenty days thereafter, object to said consol- 
idation, and demand payment for his stock, 
such stockholder or said new company may, 


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Complaint 

if said consolidation take effect at any time 
thereafter, apply to the supreme court at any 
special term thereof, held in any county 
through which any part of the said railroad 
may pass, for the appointment of three per- 
sons to appraise the value of ‘such stock. If 
the court shall be satisfied that reasonable 
notice has been given of such application, it 
shall thereupon appoint three persons to ap- 
praise the value of said stock, and shall des- 
ignate the time and place of meeting of such 
appraisers, and give such directions in re- 
gard to the proceedings on said appraisement 
as shall be deemed proper, and shall also di- 
rect the manner in which payment for such 
stock shall be made to such stockholder. The 
court may fill any vacancy in the board of 
appraisers occurring by refusal or neglect to 
serve, or otherwise; the appraisers shall 
meet at the time and place designated, and 
they or any two of them, after being duly 
sworn honestly and faithfully to discharge 
their duties, shall estimate and certify the 
value of such stock at the time of such dissent 
as aforesaid, and deliver one copy of their 
appraisal to the said company, and another 
to the said stockholder, if demanded; the 
charges and expenses of the appraisers shall 
be paid by the company. When the corpora- 
tion shall have paid the amount of the ap- 
praisal as directed by the court, such stock- 
holder shall cease to have any interest in the 
said stock, and in the corporate property of 
the said corporation, and the said stock may 
be held or disposed of by the said corpora- 
tion. 

‘¢ Section 7. When any two or more of the 
railroad companies named in this act are so 
consolidated, said consolidated company 
shall carry way passengers on their road ata 
rate not to exceed two cents per mile. 


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Complaint 
‘* Section 8. This act shall take effect im- 
mediately. ’’ 


That the railroads named in said Laws of 1853, 
Chapter 76, now constituting a part of the New 
York Central Railroad as aforesaid, accepted the 
conditions and provisions of said statute by filing 
a consolidation agreement in the office of the Sec- 
retary of State of the State of New York on July 
Oo, 1855, in accordance with said statute and said 
Laws of 1853, Chapter 76 remains unrepealed by 
the Legislature of the State of New York ‘and un- 
affected by any authority judicial or executive of 
the State of New York, except that said two cent 
fare was affirmatively duly and lawfully declared 
again effective on September 1, 1920. Said con- 
solidation agreement and said laws of 1853, Chap- 
ter 76, coustituting a charter contract, are still 
in full force and effect with many years to run and 
the said two cent fare for way passengers on the 
line between Albany and Buffalo is now the only 
legal and constitutional fare for intrastate traffic 
over said line in the State of New York. 

20. ‘That the said New York Central Railroad 
Company is a citizen of the State of New York 
and a corporation organized ‘and doing business 
under its laws was one of the parties and the prin- 
cipal party upon whose petition said report, find- 
ings and order relative to transportation were 
made by the Interstate Commerce Commission 
as aforesaid and had then and has now a residence 
at the Union Station in the City of Albany, N. Y., 
where it keeps its principal place for doing busi- 
ness in the State of New York as a corporation 


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Complaint 
organized under the Laws of the State of New 
York and which is within the Northern District 
of New York and said railroad company operates 
many miles of railroad with the appurtenances 
thereto within said Northern District. 

21. That the plaintiff, State of New York, is 
one of the states of the United States and was a 
party in the proceeding before the Interstate 
Commerce Commission as aforesaid, and said 
railroads joined in said order of the Interstate 
Commerce Commission operate within its 
boundaries in intrastate commerce, as is more 
particularly shown by a schedule which is at- 
tached hereto, made a part hereof as if pleaded 
herein and marked ‘‘ paper 6;’’ said railroads in 
the carrying on of intrastate commerce within the 
State of New York are solely under the dominion 
of the State of New York and subject only and ex- 
clusively to its laws and constitution. The State 
of New York annually expends large sums of 
money for milk and cream carried by said rail- 
roads in intrastate commerce and spends more 
and less than $365,000 in purchasing transporta- 
tion for its employees traveling on its business 
and governmental functions from said railroads, 
joined in said order of the Interstate Commerce 
Commission. Most of the railroads joined in said 
order are corporations chartered under the Laws 
of the State of New York and are citizens thereof 
and all are doing business under the laws of the 
State of New York which are set aside and de- 
stroyed by the action of the Interstate Com- 
merce Commission. The State of New York thus 
suffers irreparable damage. 


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Complaint 
That the rates, fares and charges for intrastate 
commerce within the State of New York ‘fixed by 
its laws and constitution as aforesaid for the rail- 


roads joimed in said order of the Interstate Com- 


merce Commission have not and will not result in 
undue prejudice or unjust burdens or pre- 
ference or advantage or discrimination in favor 
of intrastate commerce and against interstate or 
foreign commerce or against any person or 
locality. That of the railroads joined in said 
order of the Interstate Commerce Commission and 
actually doing intrastate business within the State 
of New York, the New York Central Railroad 
Company over its main line between New York 
and the Pennsylvania Railroad Company over its 
main line, the Erie Railroad Company over its 
main line, the Lehigh Valley Railroad Company 
over its main line, the Delaware, Lackawanna & 
Western Railroad Company over its main line, 
the Delaware & Hudson Company over its main 
line, The New York, New Haven and Hartford 
Railroad Company over its main line, the New 
York, Ontario and Western Railway Company 
over its main line, the Central New England Rail- 
way Company over its main line, the Buffalo, 
Rochester & Pittsburg Railway Company over its 
main line do a considerable interstate passenger 
and milk and cream business in connection with a 
very important intrastate passenger and milk and 
eream business both in volume and revenue. That 
as to the branch lines of the aforesaid railroads 
and as to all the other railroads named in said 
order of the Interstate Commerce Commis- 
sion and aetually doing an intrastate business 
within the State of New York, their interstate 


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Complaint 

business for passengers and milk and cream is 
insignificant as compared with their intrastate 
business both in volume and revenue. That in the 
case of the Ulster & Delaware Railroad Company 
the rates, fares and charges allowed said carriers 
under the laws and constitution of the State of 
New York for intrastate business are higher than 
those allowed by the United States for the same 
classes of business in interstate commerce. That 
many of the railroads joined in said order are 
parallelled by or compete with common carriers — 
operated by electricity or motive power other than 
steam or compete with such carriers, but which 
are not joined in said order. <As to the exact rela- 
tions between said interstate and intrastate busi- 
ness your complainants are unable to more ex- 
actly allege because the method of bookkeeping 
and accounting imposed upon such railroads by 
the Interstate Commerce Commission does not - 
permit a separation of the items in the two classes 
of business and complainants, therefore, beg to be 
left to their proof. 

22, That Charles D. Newton, a plaintiff per- 
sonally herein, is a citizen and taxpayer of the 
State of New York residing in the Village of 
Geneseo, New York, and is a consumer of milk and 
cream and is frequently transported as a pas- 
senger by said railroads operating as common . 
carriers in intrastate commerce within the State 
of New York and particularly over the Albany- 
Buffalo lines of The New York Central Railroad 
Company aforesaid and represents a class of con- 
sumers and passengers so numerous as to make it 
impracticable to bring them all before the Court 
and is made a party hereto in his personal 


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Complaint 
capacity for the purpose of determining the rights 
of all consumers and passengers under the laws, 
constitution and acts of the Interstate Commerce 
Commission hereinbefore and hereinafter referred 
to and who now suffer irreparable damage. 
23. That Charles D. Newton, plaintiff herein, is 


91 


also the Attorney General of the State of New 92 


York duly qualified and acting as such and has his 
office as is prescribed by law at the Capitol, in the 
City of Albany, N. Y., within the Northern District 
of New York. It is his duty under the laws and 
constitution of the State of New York to bring all 
actions in the judicial courts in which the People 
of the State of New York are interested and par- 
ticularly to sue the railroads joined in the order of 
the Interstate Commerce Commission as afore- 
said for the breaches as aforesaid of the condi- 
tions of their charters and for the violations as 
aforesaid of the laws and franchises of the State 
of New York under which they operate in said 
State. Otherwise he subjects himself as such 
Attorney General to impeachment, criminal prose- 
eution and a multiplicity of suits for damages and 
the loss of an office of honor and profit to his 
irreparable damage. | 

24. That the report, findings and order marked 
‘‘naper 5’’ herein of the Interstate Commerce 
Commission complained of as aforesaid are illegal, 


93 


94 


unconstitutional and void and of no effect and 95 


should be so declared by this Honorable Court in 


the following particulars. 
There were no facts before the Interstate Com- 


merce Commission justifying its report, findings 
and order and the record wholly lacks any founda- 


6 


96 


97 


98 


100 


22 


tion for the making of such report, findings and 
order. 

The report, findings and order of the Interstate 
Commerce Commission were made in defiance and 
disregard of the procedure and requirements of 
the statutes of the United States and without the 
full and fair hearing provided for therein. 

The report, findings and order of the Interstate 
Commerce Commission are indefinite, uncertain, 
ambiguous and discriminate without just grounds 
as between classes of common carriers. 

No statute of the United States authorized the 
report, findings and order of the Interstate Com- 
merece Commission. 

The report, findings and order of the Interstate 
Conimerce Commission and the statutes of the 
United States under which they pretended to act, 
violate the 10th Amendment of the United States 


Constitution, in that they invade powers reserved — . 


to the State of New York to regulate intrastate 
commerce and to create on proper conditions, con: 
trol and regulate corporations doing business in 
the State of New York. 

The report, findings and order of the Interstate 
Commerce Commission and the statutes of the 
United States, under which they pretended to act, 
violate the 5th Amendment of the United States 
Constitution by taking property of all the Com- 
plainants without due process of law in that they 
impair the obligation of the contract existing be- 
tween the State of New York and the New York 
Central Railroad Company pleaded herein as 
aforesaid. 

The report, findings and order of the Interstate 
Commerce Commission and the statutes of the 
United States, under which they pretended to act, 


93 


Complaint 
violate Article 1, Section 9, Clause 4 of the United 
States Constitution, in that they impose a capita- 
tion and direct tax without the apportionment re- 
quired. , 

The report, findings and order of the Interstate 
Commerce Commission, and the statutes of the 
United States under which they pretended to act, 
violate Article 1, Section 8, Clause 3 of the United 
States Constitution in that they assume to regu- 
late purely intrastate commerce and require that 
revenue for interstate commerce be collected 
from intrastate commerce. 

The report, findings and order of the Interstate 
Commerce Commission and the statutes of the 
United States, under which they pretended to act, 
violate Article 1, Section 5, Clause 9 of the United 
States Constitution, in that they prefer ports of 
other states to the ports of the State of New York. 

25. That the Interstate Commerce Commission 
threatens ‘now to sue the steam railroads joined in 
its orders as aforesaid for penalties amounting to 
millions of dollars if said railroads engaged in 
intrastate commerce within the State violate said 
report, findings or order of the Interstate Com- 
merce Commission or any part of them. 

Wherefore your complainants, the State of New 
York, on behalf of all its citizens and all the per- 
sons residing in the State of New York, and 
Charles D. Newton as Attorney-General of the 
State of New York, and Charles D. Newton for 
himself personally and representing a class as 
aforesaid, being without an adequate remedy at 
law, and subject to irreparable damage and a mul- 
tiplicity of suits pray: 


101 


102 


103 


108 


' 106 


107 


108 


109 


110 


24 


Complaint 

1. That this Honorable Court may grant an in- 
terlocutory injunction during the pendency of 
this suit against the defendants, the United States 
and the Interstate Commerce Commission and 
each of them restraining the enforcement, opera- 
tion and execution of and setting aside in whole 
the report, findings and order made and entered 
by the Interstate Commerce Commission as afore- 
said, attached hereto and marked ‘‘ paper 5 ’’ and 
restraining said defendants, their officers, em- 
ployees, agents, and servants and successors in 
office and each of them from doing anything or 
beginning any suit, action or prosecution against 
the railroads joined in said order or the plaintiffs 
to compel the enforcement, operation and execu- 
tion of said order or interfering with the enforce- 
ment of the laws and constitution of the State of 
New York. That the District Judge of this Hon- 
orable Court upon presentation of this application 
for an interlocutory injunction shall 1mmediately 
eall to his assistance to hear and determine this 
application two other judges, of whcm at least 
one shall be a circuit judge; that this Honorable 
Court by an order to show cause shall give at least 
five days’ notice of the hearing of this application 
for an interlocutory injunction to the Interstate 
Commerce Commission and to the Attorney-Gen- 
eral of the United States all as by statute made 
and provided. | 

2. That the report, findings and order of the 
Interstate Commerce Commission attached hereto 
and marked ‘‘ paper 5 ’’ be set aside in whole and 
declared null and void, unconstitutional and ille- 
gal, usurpatory and void. 

3. That Section 13, subdivisions 3 and 4 of the 


25 


Complaint 
Interstate Commerce Act be declared null and 
void, as unconstitutional and usurpatory. 

4. That Section 15-a of the Interstate Com- 
merce Act be declared null and void as unconsti- 
tutional and usurpatory. 

5. That this Honorable Court shall issue writs 
of mandamus, certiorari and prohibition as war- 
ranted by the principles and usages of law to the 
defendants herein and to whoever else may be 
necessary or proper parties, ancillary to the 
Jurisdiction hereinbefore and hereinafter invoked. 

6. That this Honorable Court shall issue a writ 
of injunction against the defendants, the United 
States and the Interstate Commerce Commission 
and each af them perpetually restraining the en- 
forcement, operation and execution of and setting 
aside in while the report, findings and order of the 
Interstate Commerce Commission attached hereto 
and marked ‘‘ paper 95,’’ and restraining said de- 
fendants, their officers, agents, employees and 
servants and successors in office and each of them 
from doing anything or beginning any sult, action 
or prosecution against the railroads joined in said 
order or against the plaintiffs herein to compel 
the enforcement, operation and execution of said 
report, findings and order or interfering with the 
enforcement of the laws and constitution of the 
State of New York. 

Plaintiffs also pray not only for a writ of in- 
junction conformably to the prayer, but also that 
a subpoena of the United States of America issue 
out of any under the seal of the Honorable Court 
directed to the defendants, the United States and 
the Interstate Commerce Commission thereby 


fe 


11%: 


112 


113 


114 


115 


116 


117 


118 


119 


120 


26 


Complaint 
commanding them and each of them on a certain 
day therein to be named to be and appear before 
this Honorable Court then and there to answer, 
(but not under oath, answer under oath being ex- 
pressly waived) all and singular in the premises 
and to perform and abide by such order and di- 
rection or decree as may be made in the premises 
and that on the final hearing hereof said writ of 
injunction may be made perpetual and for such 
other relief as to the Court may seem meet and 
the plaintiffs will ever pray. 


Subseribed by: 
The State of New York, 
Charles D. Newton, 
personally and as At- 
torney-General of the 
State of New York. 
Mdward CG. Griffin, 
Deputy Attorney General of New York, 
Solicitor for the Plaintiffs, 
Office and Post Office Address, 
The Capitol, Albany, N. Y. 


Ciry anp County or ALBANY, 
STATE OF NEW YORK, } if 


Charles D. Newton, being duly sworn on oath, 
says that he is the Attorney-General of the State 
of New York, duly qualified and acting as such and 
that he verifies this bill of complaint upon behalf 
of the plaintiffs herein, the State of New York, 
and himself personally and as Attorney-General 
of the State of New York; that he has read the 
above and foregoing bill of complaint and knows 


yA | 


Complaint 
the contents thereof and that the same is true in 
substanee and in fact. 


CHARLES D. NEWTON. 


Subseribed and Sworn to before me 
this 27th day of December, 1920. 


(Sra) Wiiuiam M. 'T'Homas, 
Notary Public, Albany County. 


121 


(22 


124 


125 


28 


126 | PAPER 1 


STATE OF NEW YORK 
Pusuic SERvIcCE ComMMIssion — Srconp District 
At a session of the Public Service 
Commission, ‘Second District, held in 
the city of ae on the 19th ae of 
oe August, 1920. 
Present: 
Cuarues B. Hitt, 
Chairman, 
FRANK IRVINE, 
JoHN A. BaRHITE, 
JosEPH A. KELLOGG, 
Grorce R. Van Names, 
128 Commissioners. 


In the Matter of the Petition or 
Complaint of THz New York 
CuntraL Ratroap ComMPany;. 
THe Drnawart, LAcKAWANNA 
AND WeEsTERN Rarttroap Com- Case 

29 «69PANY; Tue Lenich Vatiey { No. 7704 

Rartroap Company; and Other 
Steam Railroad Companies; in 
Respect to Proposed Higher 
Passenger Fares. 


Upon the facts found and for the reasons stated 
in the accompanying opinion, it is 
130. Onrprrep, That the petition herein be, and the 
same hereby is denied, save in so far as it relates 
to freight rates, and as to such freight rates, that 
it be dismissed because the subject matter has 
‘been determined in Case No. 7693. 
By the Commission, 
[u. s.] FRANCIS E. ROBERTS, 
Acting Secretary. 


29 


PAPER 2 


In the Matter of the Petition or 
Complaint of Tue New York 
CeNTRAL RarroaD Company; 
also Ture Dertawarz, Lacxka- 
WANNA AND WrsTERN RarLRoapD Case 
Company; the Lenicn Vauusy f No. 7704 
Rarttroap Company; and OTHER 
STEAM RarLRoapD CoMPANIES, in 
Respect to Proposed Higher 
Passenger Fares. 


Appearances: 


C. C. Paulding, Grand Central Terminal, New 
York city, and associated with him the following 
as a Committee of Counsel: W. L. Visscher, Clyde 
Brown, John B. Kerr, Mr. Andrus of the New 
York, Ontario and Western Railway Company, 
Messrs. Noyes and Waldron of The Delaware and 
Hudson Company, Mr. R. W. Barrett of the 
Lehigh Valley Railroad Company, and Mr. 
Brownell of the HKrie Railroad Company, and 
Mr. Cole of the Boston and Maine Railroad. 


By THE CoMMISSION : 

The steam railroads subject to the jurisdiction 
of this Commission ask authority to file tariffs 
effective on short notice whereby passenger rates 
will be increased 20 per cent, a surcharge made 
upon passengers in sleeping and parlor cars 


amounting to 50 per cent of the charge for space 


in such cars, and an increase of 20 per cent made 

in excess baggage rates. The petition is informal 

and very general in its terms, but at the hearing 

held in Albany, August 17, 1920, it was stated on 
8 


131 


132 


133 


134 


135 


136 


137 


138 


139 


140 


30 


Paper 2 

behalf of the petitioners that the object was to 
make intrastate rates within the State of New 
York correspond to the increased rates authorized 
by the Interstate Commerce Commission in the 
general rate increase case Ex Parte 74. Concur- 
rently with this application there was made by the 
same carriers an application to file effective on 
short notice, increases in freight rates. Such 
permission was granted in case No. 7693 for 
reasons stated in a memorandum accompanying 
the order. The instant case presents entirely 
different legal questions. 

The passenger rates now in effect are those im- 
posed by the United States Railroad Administra- 
tion during Federal control and continued in 
effect with certain qualifications by the Trans- 
portation Act of 1920. The basic rate is three 
cents a mile and the proposed increase for ordi- 
nary transportation results in a rate of three and 
six-tenths cents a mile. The proposed surcharge 
on passengers in sleeping and parlor cars still fur- 
ther increases the rate for that class of passen- 
gers. Section 57 of the Railroad Law provides 
as follows: 

‘‘ Rates of fare. Subject to the provisions 
of the public service commissions law, every 
railroad corporation may fix and collect the 
following rates of fare as compensation to 
be paid for transporting any passenger and 
his baggage, not exceeding one hundred and 
fifty pounds in weight, for each mile or frac- 


tion of a mile. 
*& * 


‘<2. If a road not incorporated prior to 
May fifteenth, eighteen hundred and seventy- 
nine, and not located in the counties of New 


ol 


Paper 2 
York and Kings, or within the limits of any 
incorporated city, and not more than twenty- 
five miles in length, five cents; if over twenty- 
five and not more than forty miles, four 


cents; and if over forty miles, three cents. 
* * * * *& * * 


‘¢ 5. In all other cases, three cents for 
every such mile or fraction thereof, with a 
right to a minimum single fare of not less 
than five cents.”’ 


Subdivision 1 not quoted provides for roads 
propelled by rope or cable. The other portions 
omitted relate to narrow-gauge roads, those with 
erades of two hundred feet to the mile and up- 
wards, and roads not exceeding fifteen miles in 
length and not entering an incorporated city. 
The section also provides that it shall not be con- 
strued to allow any rate of fare for way passen- 
gers greater than two cents per mile on The 
New York Central Railroad Company’s tracks 
wherever it is restricted to that rate of fare, that 
is to say, between Albany and Buffalo. The gen- 
eral effect of this section is to fix a maximum rate 
of three cents a mile on all important roads in the 
State. We therefore deal with the case on this 
basis. If any roads not subject to the limitation 
desire to put into effect the proposed rates they 
may make separate application and show reasons 
for exceptional treatment. This application 1s 
made by the roads as an entirety, and the record 
affords no basis for a discrimination among them. 

It was held in People ex rel. U. € D. R. R. Co. 
vy. Pub. Ser. Commission, 171 App. Div. 607, 
affirmed, 218 N. Y. 642, that section 60 of the Rail- 
road Law establishing mileage book rates was 


141 


142 


143 


144 


145 


146 


147 


148 


149 


150 


oo 


Paper 2 
amended and revised together with section 57 
with reference to each other and to the Public 
Service Commissions Law, and further that 
under section 49 of the Public Service Commis- 
sions Law the Commission is authorized to per- 
mit a rate in excess of that fixed by statute when 
after an investigation it appears that the statu- 
tory rate is insufficient; that the limitations of the 
statute remain on the railroads but not on the 
power of the Commission. It quite clearly ap- 
pears that the court was of the opinion that the 
carrier could not of its own volition file tariffs and 
put into effect rates in excess of those fixed by 
statute, and that to effect this purpose it must 
invoke the power of the Commission under sec- 
tion 49. The relevant portion of section 49 is sub- 
division 1 and is as follows: 


‘¢ Whenever either commission shall be of 
opinion, after a hearing had upon its own 
motion or upon a complaint, that the rates, 
fares or charges demanded, exacted, charged 
or collected by any common carrier, railroad 
corporation or street railroad corporation 
subject to its jurisdiction for the transporta- 
tion of persons or property within the state, 
or that the regulations or practices of such 
common carrier, railroad corporation or 
street railroad corporation affecting such 

- rates are unjust, unreasonable, unjustly dis- 
criminatory or unduly preferential, or in any- 
wise in violation of any provision of law, or 
that the maximum rates, fares or charges, 
chargeable by any such common carrier, rail- 
road or street railroad corporation are in- 
sufficient to yield reasonable compensation 
for the service rendered, and are unjust and 
unreasonable, the commission shall with due 


30 


Paper 2 
regard among other things to a reasonable 
average return upon the ‘value of the prop- 
erty actually used in the public service, and 
to the necessity of making reservation out of 
income for surplus and contingencies, deter- 


mine the just and reasonable rates, fares and. 


charges to be thereafter observed and in 
force as the maximum to be charged for the 
service to be performed, notwithstanding that 
a higher rate, fare or charge has been hereto- 
fore. authorized by statute, and shall fix the 
same by order to be served upon all common 
carriers, railroad corporations or street rail- 
road corporations by whom such rates, fares 
and charges are thereafter to be observed.”’ 


This section as originally enacted did not con- 
tain the clause beginning ‘‘ or the maximum rates, 
fares or charges, chargeable by any such common 
carrier, railroad or street railroad corporation 
are insufficient to yield sufficient compensation,”’ 
ete. Originally the section referred to excessive, 
unjust, or unreasonable rates or practices. The 
provision last quoted permitting the carrier to 
complain when rates are insufficient was added 
by amendment by chapter 546 of the Laws of 1911, 
and is the only provision directly applicable to 
the case (People ex rel. U. € D. R. R. Co. v. Pub. 
Ser. Commission, supra). On the hearing the 
carriers did not assert that they claim relief be- 
cause the rates are insufficient under section 49, 
and they certainly presented no evidence suffi- 
cient to warrant the Commission in making a 
final determination to that effect. All that was 
asserted was that when the interstate rates go 
into effect the present intrastate rates will be un- 


9 


151 


152 


153 


154 


155 


156 


158 


159 


160 


34 


Paper 2 
justly discriminatory or unduly preferential as 
between interstate and intrastate passenger traffic 
and, therefore, unlawful under subdivision 4 of 
section 13 of the Interstate Commerce Act as 
amended by Transportation Act of February 28, 
1920. Subdivision 4, section 13, is as follows: 


‘¢ Whenever in any such investigation the 
Interstate Commerce Commission, after full 
hearing, finds that any such rate, fare, charge, 
classification, regulation, or practice causes 
any undue or unreasonable advantage, prefer- 
ence, or prejudice as between persons or 
localities in intrastate commerce on the one 
hand and interstate or foreign commerce on 
the other hand, or any undue, unreasonable, 
or unjust discrimination against interstate or 
foreign commerce, which is hereby forbidden 
and declared to be unlawful, it shall prescribe 
the rate, fare, or charge, or the maximum or. 
minimum, or maximum and minimum, there- 
after to be charged, and the classification, 
regulation, or practice thereafter to he 
observed, in such manner as, in its judg- 
ment, will remove such advantage, prefer- 
ence, prejudice or discrimination. Sueh rates, 
fares, charges, classifications, regulations, 
and practices shall be observed while in effect 
by the carriers parties to such proceeding 
affected thereby, the law of any State or the 
decision or order of any State authority to 
the contrary notwithstanding.’’ 


It is not claimed that the present rates are un- 
justly discriminatory or unduly preferential as 
between points wholly within the State of New 
York. The discrimination claimed relates to dis- 
crimination between persons or localities in intra- 
state commerce on the one hand and interstate or 


30 


Paper 2 

foreign commerce on the other. <A diserimina- 
tion may, however, as well result from interstate 
rates that are too high or too low as from intra- 
state rates that are too high or too low, and the 
proper correction may be in the interstate rates 
over which this Commission has no control. 
There is no express authority given to the Com- 
mission to grant rates in excess of those author- 
ized by statute except under section 49, which has 
to do only with rates insufficient in themselves. 
We should not in the absence of legislative au- 
thority arrogate to the Commission power to 
authorize a rate in excess of the statutory maxi- 
mum merely to enforce a recent act of Congress 
which contains within itself a special remedy. 

The freight rate case is nothing more than an 
application for a:short notice permission and in- 
volves no predetermination of the propriety of the 
rates. This application while it is in part for a 
short notice permission, demands as a prelim- 
inary an investigation and finding of facts suffi- 
cient to authorize and demand that the Commis- 
sion disregard the statutory limitation, and the 
applicants present no evidence warranting such 
a finding. 

As already stated if there are any carriers not 
within the three cent limitation and whose cases 
demand special consideration their claims may be 
presented. The excess baggage rates as well as 
rates for milk and cream carried on passenger 
trains were treated by the Interstate Commerce 


Commission as a part of the case relating to. 


passenger rates. We should treat them in the 
same manner and deny the application generally. 


161 


162 


163 


164 


165 


36 


ie PAPER 3 


BEFORE THE 
INTERSTATE COMMERCE COMMISSION 


In THE MATTER 
| of the 
ag Rates of Fare for Passengers 
Charged and Taken upon the 
Line of the New York Central 
Railroad Company in the State 
of New York and Other States. 


Docket 
No. 11623. 


168 SECOND AMENDED AND SUPPLEMENTAL PETITION 


Cuarues C. PAuLpING, 

CiypE Brown, 

Francis I. Gowen, 

Grorce F’. BRowNELL, 

Epwarp G. BuckLanD, 

R. W. Barrett, 

W. S. JENNEY, 

Watrer C. Noyes, 

J. F. Kaany, 

C. L. ANDRUS, 
Counsel. 


169 


170 


a” 


Paper 3 
BEFORE THE 
INTERSTATE COMMERCE COMMISSION 


171 


In THE Matter 
of the 
Rates of Fare for Passengers 
Charged and Taken upon the 
Line of the New York Central 
Railroad Company in the State 
of New York and Other States. | 


Docket 
No'11623). 4/4 


SECOND AMENDED AND SUPPLEMENTAL PETITION 


Comes now your petitioner, the New York Cen- 
tral Railroad Company, and by this, its second 178 
amended and supplemental petition, respectfully 
represents on its own behalf and on behalf of the 
Pennsylvania Railroad Company, the Erie Rail- 
road Company, the Lehigh Valley Railroad Com- 
pany, the Delaware, Lackawanna and Western 
Railroad Company, the Delaware and Hudson 
Company, the New York, Ontario and Western 
Railway Company, the New York, New Haven 
and Hartford Railroad Company, the Central 
New England Railway Company, the Long Island 
Railroad Company, the Buffalo, Rochester and 
Pittsburgh Railway Company, and other steam 
railroad companies, doing business within the 
State of New York, as follows: 175 


174 


I. That your petitioner and each of the railroad 
companies above named is a corporation, doing 
business, both freight and passenger, between 
points within the State of New York and between 
points within the State of New York and without 
the State of New York, and in other states of the 

10 | 


176 


177 


178 


179 


180 


38 


Paper 3 
United States, and subject in all respects, to the 
provisions of the Interstate Commerce Act, as 
amended. 

That the New York Central Railroad Company, 
and each of the other companies above named or 
referred to, 1s situated in the eastern group of 
railroads of the United States, as such group is 
described in the decision of this honorable Com- 
mission in the cause designated on the docket of 
this Commission, as Hx Parte 74 and styled ‘‘ In 
the matter of the applications of carriers in offi- 
cial, southern, and western classification terri- 
tories for authority to increase rates,’’ and that 
all steam railroads in the State of New York are 
comprised within said eastern group. 


Ii. That the Public Service Commission of the 

tate of New York is a statutory body created by 
statute of the State of New York, being chapter 
429 of the Laws of 1907, as subsequently re-en- 
acted and amended in the year 1910, constituting 
chapter 48 of the Consolidated Laws, and as 
amended from time to time thereafter, and has 
jurisdiction over, among other matters, steam 
railroads in the State of New York, including the 
rates and fares charged and chargeable for the 
transportation of persons and property upon and 
over such railroads within said State. 

That the Railroad Law, so-called, of the State 
of New York, is a general statute of said State, 
containing provisions with regard to railroads 
within the State and that, among other provisions 
of said statute, is contained the following: 


‘8 57. RATES OF FARE. Subject to the 
provisions of the public service commissions 


ag 


Paper 3 
law, every railroad corporation may fix and 
collect the following rates of fare as com- 
pensation to be paid for transporting any 
passenger and his baggage, not exceeding 
one hundred and fifty pounds in weight, for 
each mile or fraction of a mile: 
* % * * * S 


* * * * 


‘¢5. In all other cases, three cents for 
every such mile or fraction thereof, with a 
right to a minimum single fare of not less 
than five cents. 

‘* This chapter shall not be construed to 
allow any rate of fare for way passengers 
greater than two cents per mile to be charged 
or taken over the track or tracks of the rail- 
road known as the New York Central Rail- 
road Company, and the rate of fare for way 
passengers over the track or tracks of such 
company shall continue to be two cents per 
mile and no more, wherever it is restricted 
to that rate of fare, nor shall any consoli- 
dated railroad corporation charge a higher 
rate of fare per passenger per mile upon any 
part or portion of the consolidated line than 
was allowed by law to be charged by each 
existing corporation thereon previous to such 
consolidation.”’ 


and that the said statute contains provisions in 
section 60 thereof requiring every railroad within 
the State of New York, the line or lines of which 
are more than 100 miles in length and which is 
authorized by law to charge a maximum fare of 
more than two cents per mile and not more than 
three cents per mile, and which does charge a 
maximum fare of more than two cents per mile, 
to issue mileage books, having either 500 or 1,000 
coupons attached thereto, entitling the holder 


181 


183 


184. 


186 


187 


188 


189 


190 


40 


Paper 8 
thereof to travel either 500 or 1,000 miles on the 
line or lines of such railroad mileage books shall 
be good until all coupons attached thereto have 
been used and providing a penalty for the refusal 
to issue such mileage books. | 

III. That heretofore, pursuant to an applica- 
tion duly filed with this Commission by the rail- 
road companies of the United States, wherein this 
Commission was requested to increase rates, fares 
and charges so that the railroads might earn the 
net railway operating income provided by the 
provisions of the Transportation Act, this Com- 
mission held hearings and, on July 31, 1920, pro- 
mulgated its report and order in said cause, which 
is referred to in the first paragraph or subdivi- 
sion hereof, and is entitled ‘* In the matter of the 
applications of carriers in official, southern and 
western classification territories for authority to 
increase rates.’’ The report and accompanying 
order referred to herein are made part of this 
petition. 

That this Commission, in its decision in ex 
parte 74, determined the aggregate value of the 
carriers’ property in the eastern group, for the 
purposes of that proceeding, would be in round 
numbers $8,800,000,000, and that in making this 
valuation this Commission did not attempt to sep- 
arate property devoted to the purposes of inter- 
state transportation from property devoted to in- 
trastate transportation, but that the said figure 
comprised all the property of the carriers in the 
said group devoted to the purposes of transporta- 
tion. 


41 


Paper 3 

That in the decision in said proceeding certain 
increases in freight rates and in passenger fares 
were authorized by this Commission and it was 
determined by this Commission that the increases 
allowed would yield no more than was necessary 
to permit the carriers to earn 6 per cent upon the 
value of their property held for and used in the 
service of transportation; that this Commission, 
in making this decision, made no separation be- 
tween interstate revenue and intrastate revenue 
and did not separate the expenses for handling 
interstate traffic and intrastate traffic, but regarded 
the business of the carriers as a whole, both inter- 
state and intrastate, both as to freight and pas- 
senger. 

That in the said cause, ex parte 74, this Com- 
mission, among other things, granted an increase 
in passenger fares as follows: 


‘¢1, All passenger fares and charges may 
be increased 20 per cent. The term ‘ passen- 
eer fares’ may be considered to include 
standard local or interline fares; excursion, 
convention, and other fares for special occa- 
sions; commutation and other multiple forms 
of tickets; extra fares on limited trains; club 
ear charges. 

‘¢2. Excess baggage rates may be _ in- 
creased 20 per cent. provided that where 
stated as a percentage of or dependent upon 
passenger fares the increase in the latter will 
automatically effect the increase in the ex- 
cess-baggage charges. 

‘<3. A surcharge upon passengers in sleep- 
ing and parlor cars may be made.amounting 
to 50 per cent. of the charge for space in 
such cars, such charge to be collected in con- 


11 


191 


192 


193 


194 


195 


196 


197 


198 


199 


200 


42 


Paper 3 
nection with the charge for space, and to ac- 
crue to the rail carriers. 

‘<4, Milk and cream are usually carried in 
passenger trains, and the revenue therefrom 
is not included in freight revenue. Rates on 
these commodities may be increased 20 per 
cent.’’ 


IV. That pursuant to the provisions of General 
Order No. 28 of the Director-General of Rail- 
roads, issued by him on May 25, 1918, the said 
Director-General established standard passenger 
rates on the basis of three (8¢c.) cents per mile 
throughout the United States, which rate included 
intrastate rates within the State of New York; 
that commutation rates were, under said General 
Order, increased 10 per cent.; that the use of 
mileage books and all kinds of mileage tickets 
were abolished by said order; and that all rates 
of fare so established under the terms of said 
General Order No. 28 by the Director-General 
have been in foree since June 10, 1918, upon the 
lines of the railroads of the State of New York 
for intrastate transportation of passengers, and 
are now in force for such intrastate transporta- 
tion, pursuant to tariffs duly filed with this Com- 
mission. 


V. That following the decision of this Commis- 
sion in ex parte 74 passenger tariffs in blanket 
supplement form have been filed with this Com- 
mission, making effective August 26, 1920, the 
passenger increases allowed by the Commission 
in the decision in said cause, and that such in- 
creases apply, under the tariffs filed, to the fares 
for interstate travel charged and taken upon the 


43 


Paper 3 

line of each of the railroads above mentioned and 
referred to, and that after August 26, 1920, the 
fares so fixed by said blanket supplements will be 
the lawful rates of fare for interstate travel upon 
the lines of said railroads; that the percentage of 
increase authorized by this Commission means, 
on interstate tickets, that a rate of fare of 3.6 
cents per mile so fixed, is the normal one-way 
rate of fare and that interstate passenger fares 
and charges, including the charges for the trans- 
portation of milk and cream, will be increased 
over the present fares and charges by the amount 
authorized by this Commission for interstate 
transportation. 


VI. That following the decision of this Com- 
mission in the said cause, ex parte 74, the steam 
railroad companies of the State of New York, in- 
cluding your petitioner, the New York Central 
Railroad Company, and each of the other railroad 
companies above named and referred to, made 
an application to the Public Service Commission 
of the State of New York for permission to file, 
effective upon five days’ notice, blanket form 
supplements of tariffs naming passenger fares 
and charges, commutation and other charges, ex- 
cess baggage charges and milk and cream rates, 
within the State of New York, such blanket sup- 
plements to name fares and charges for intrastate 
transportation within said State, equal to the 
amount named in the tariffs filed with this Com- 
mission under the said decision in ex parte 74. 

That a hearing was had by said Commission 
upon said application on the 17th day of August, 
1920, and thereafter and upon the 19th day of 


201 


202 


203 


205 


206 


207 


208 


209 


210 


44 


Paper 3 
August, 1920, the said Commission rendered its 
decision, denying said petition in an opinion as 
follows: 


‘STATE OF NEW YORK 


‘PUBLIC SERVICE COMMISSION — 
SECOND DISTRICT 


‘* Decided: August 19, 1920. 
‘* Case No. 7704. 


‘In the matter of the petition (or com- 
plaint, of The New York Central Railroad 
Company; also The Delaware, Lackawanna 
and Western Railroad Company; the Lehigh 
Valley Railroad Company; and other steam 
railroad companies, in respect to proposed 
higher passenger fares. 

‘‘ By the Commission: 


‘¢' The steam railroads subject to the juris- 
diction of this Commission ask authority to 
file tariffs effective on short notice whereby 
passenger rates will be increased 20% a sur- 
charge made upon passengers in sleeping and 
parlor cars amounting to 50% of the charge 
of space in such cars and an increase 
of 20% made in excess baggage rates. 
The petition is informal and very gen- 
eral in its terms but at the hearing 

held in Albany, August 17, 1920, it was 
stated on behalf of the petitioners that 
the object was to make intrastate rates within 
the State of New York correspond to the in- 
creased rates interstate authorized by the 
Interstate Commerce Commission in the gen- 
eral rate increase case Ex parte 74. Coneur- 
rently with this application there was made 
by the same carriers an application to file 
effective on short notice, increases in freight 


A5 


Paper 3 
rates. Such permission was granted in Case 
No. 7693 for reasons stated in a memoran- 
dum accompanying the order. The instant 
case presents entirely different legal ques- 
tions. 

‘‘The passenger rates now in effect are 
those imposed by the United States Railroad 
Administration during Federal control and 
continued in effect with certain qualifications 
by the Transportation Act of 1920. The basic 
rate is three cents a mile and the proposed 
increase for ordinary transportation results 
in a rate of 3.6 cents a mile. The proposed 
surcharge on passengers in sleeping and par- 
lor cars still further increases the rate for 
that class of passengers. Section 57 of the 
Railroad Law provides as follows: 


‘Rates of fare. Subject to the pro- 
visions of the public service commissions 
law, every railroad corporation may fix 
and collect the following rates of fare as 
compensation to be paid for transporting 
any passenger and his baggage, not ex- 
ceeding one hundred and fifty pounds in 
weight, for each mile or fraction of a 
mile. 


* SUDGIVISIONY = 


‘If a road not incorporated prior to 
May fifteenth, eighteen hundred and sev- 
enty-nine, and not located in the counties 
of New York and Kings, or within the 
limits of any incorporated city, and not 
more than twenty-five miles in length, 
five cents; if over twenty-five and not 
more than forty miles, four cents and if 
over forty miles, three cents. 


12 


211 


212 


213 


214 


215 


216 


217 


218 


219 


220 


46 


Paper 8 
‘ Subdivision 5 — 

‘In all other cases, three cents for 
every such mile or fraction thereof, 
with a right to a minimum single fare of 
not less than five cents.’ 


‘¢ Subdivision 1 not quoted provides for 
roads propelled by rope or cable. The other 
portion omitted relate to narrow-gauge roads 
those with grades of two hundred feet to the 
mile and upwards, and roads not exceeding 
fifteen miles in length and not entering an in- 
corporated city. The section also provides 
that it shall not be construed to allow any 
rate of fare for way passengers greater than 
two cents per mile on the New York Central 
Railroad Company wherever it is restricted 
to that rate of fare, that is to say between 
Albany and Buffalo. The general effect of 
this section is to fix a maximum rate of three 
cents a mile on all important roads in the 
State. We therefore deal with the case on 
this basis. If any roads not subject to the 
limitation desire to put into effect the pro- 
posed rates they may make a separate appli- 
eation and show reasons for exceptional 
treatment. This application is made by the 
roads on an entirety and the record affords 
no basis for a discrimination among them. 

‘¢ Tt was held in the People Ex Rel U. & D. 


~ R.R. Co. v. Pub. Ser. Commission 171, App. 


Div. 607, Affirmed 218, N. Y. 642, that section 
60 of the Railroad Law establishing mileage- 
book rates was amended and revised together 
with section 57 with reference to each other 
and to the Public Service Commissions Law, 
and further that under section 49 of the Pub- 
lic Service Commissions Law the Commis- 
sion is authorized to permit a rate in excess 
of that fixed by statute when after an investi- 


47 


Paper 3 
gation it appears that the statutory rate is 
insufficient; that the limitations of the statute 
remain on the railroads but not on the power 
of the Commission. It quite clearly appears 
that the court was of the opinion that the 
carrier could not of its own volition file tariffs 
and put inte effect rates in excess of those 
fixed by statute and that to effect this purpose 
it must invoke the power of the commission 
under section 49. The relevant portion of 
section 49 is subdivision 1 and is as follows: 


‘Whenever either commission shall 
be of opinion, after a hearing had upon 
its own motion or upon a complaint, that 
the rates, fares or charges demanded, ex- 
acted, charged or collected by any com- 
mon carrier, railroad corporation or 
street railroad corporation, subject to its 
jurisdiction for the transportation of 
persons or property within the state, or 
that the regulations or practices of such 
common carrier, railroad corporation or 
street railroad corporation affecting such 
rates are unjust, unreasonable, unjustly 
discriminatory or unduly preferential, or 
in anywise in violation of any provision 
of law, or that the maximum rates, fares 
or charges, chargeable by any such com- 
mon earrier, railroad or street railroad 
corporation are insufficient to yield rea- 
sonable compensation for the service ren- 
dered, and are unjust and unreasonable, 
the commission shall with due regard 
among other things to a reasonable aver- 
age return upon the value of the property 
actually used in the public service and to 
the necessity of making reservation out 
of income for surplus and contingencies, 
determine the just and reasonable rates, 
fares and charges to be thereafter ob- 


221 


222 


223 


224. 


229 


226 


227 


228 


229 


230 


48 


Paper 3 

served and in force as the maximum to 
be charged for the service to be per- 
formed, notwithstanding that a higher 
rate, fare or charge has been heretofore 
authorized by statute, and shall fix the 
same by order.to be served upon all com- 
mon carriers, railroad corporations or 
street railroad corporations by whom 
such rates, fares and charges are there- 
after to be observed.’ 


‘‘ This section as originally enacted did not 
contain the clause beginning ‘‘ Or the maxi- 
mum rates, fares or charges chargeable by 
any such common carrier, railroad or street 
railroad corporation are insufficient to yield 
sufficient compensation, ete.’’ Originally the 
section referred to excessive, unjust or un- 
reasonable rates or practices. The provision 
last quoted permitting the carrier to com- 
plain when rates are insufficient was added 
by amendment by chapter 546 of the Laws of 
1911 and is the only provision directly applic- 
able to the case (People Ex. Rel U. & D. R. R. 
Co. v. Pub. Ser. Commission, supra.) On the 
hearing the carriers did not assert that they 
claim relief because the rates are insufficient 
under section 49 and they certainly presented 
no evidence sufficient to warrant the Com- 
mission in making a final determination to 
that effect. All that was asserted was that 
when the interstate rates go into effect the 
present intrastate rates will be unjustly dis- 
eriminatory or unduly preferential as be- 
tween interstate and intrastate passenger 
traffic, and, therefore, unlawful under subdi- 


vision 4 of section 13 of the Interstate Com- 


merece Act as amended by the Transportation 


49 


Paper 3 
Act of February 28, 1920. Subdivision 4, sec- 
tion 13 is as follows: 


‘Whenever in any such investigation 
the Interstate Commerce Commission, 
after full hearing, finds that any such 
rate, fare, charge, classification, regula- 
tion or practice causes any undue or un- 
reasonable advantage, preference, or 
prejudice as between persons or locali- 
ties in intrastate commerce on the one 
hand and interstate or foreign commerce 
on the other hand, or any undue, un- 
reasonable, or unjust discrimination 
against interstate or foreign commerce, 
which is hereby forbidden and declared 
to be unlawful, it shall prescribe the rate, 
fare, or charge, or the maximum or min- 
imum, or maximum and minimum, there- 
after to be charged, and the classifica- 
tion, regulation or practice thereafter to 
be observed, in such manner as, in its 
judgment, will remove such advantage, 
preference, prejudice or discrimination. 
Such rates, fares, charges, classifica- 
tions, regulations and practices shall be 
observed while in effect by the carriers 
parties to such proceeding affected 
thereby, the law of any State or the de- 
cision or order of any State authority 
to the contrary notwithstanding.’ 


“Tt is not claimed that the present rates 
are unjustly discriminatory or unduly pref- 
erential as between points wholly within the 
State of New York. The discrimination 
claimed relates to discrimination between per- 
sons or localities in intrastate commerce on 
the one hand and interstate or foreign com- 
merce on the other. A discrimination may, 
however, as well result from interstate 

13 


231 


232 


233 


234 


235 


236 


237 


238 


239 


240 


o0 


Paper 3 
rates that are too high or too low as 
from intrastate rates that are too high or too 
low and the proper correction may be in the 
interstate rates over which this Commission 
has no control. There is no express authority 
given to the Commission to grant rates in ex- 
cess of those authorized by statute except 
under section 49, which has to do only with 
rates insufficient in themselves. We should 
not in the absence of legislative authority ar- 
rogate to the Commission power to authorize 
a rate in excess of the statutory maximum 
merely to enforce a recent act of Congress 
which contains within itself a special remedy. 

‘‘ The freight rate case is nothing more 
than an application for a short notice per- 
mission and invelves no pre-determination of 
the propriety of the rates. This application 
while it is in part for a short notice permis- 
sion, demands as a preliminary an investiga- 
tion and finding of facts sufficient to author- 
ize and demand that the Commission disre- 
gard the statutory limitation and the appli- 
cants present no evidence warranting such a 
finding. 

‘* As already stated, if there are any car- 
riers not within the three-cent limitation and 
whose cases demand special consideration, 
their claims may be presented. The excess 
baggage rates for milk and cream carried on 


passenger trains were treated by the Inter- 


state Commerce Commission as a part of the 
case relating to passenger rates. We should 
treat them in the same manner and deny the 
application generally.’’ 


and that the result of such decision is that, after 
August 26, 1920, the one-way interstate rate of 
fare for passengers upon the lines of the railroads 


ol 


Paper 3 

of the companies hereinabove named and referred 
to will be 3.6 cents per mile, and the rate of fare 
for intrastate passage upon such lines will be 
three cents per mile; that the fare and charge for 
commutation and other multiple forms of tickets, 
for excursion, convention and other fares for spe- 
cial occasions, for extra fares on limited trains, 
for club car charges, and for excess baggage rates 
will be, for interstate passage, twenty per cent 
more than the fares and charges for intrastate 
passage as to such transportation, and that no 
sur-charge will be charged or taken for passen- 
gers in sleeping and parlor cars in intrastate 
travel, whereas a surcharge of fifty per cent of 
the charges for space in such cars will be made 
to passengers in such cars in interstate travel. 

That the difference to the railroads, herein 
named and referred to, in money, as between the 
amounts, which would be received by these car- 
riers for the transportation within the State of 
New York, if the passenger fares and charges, 
including fares and charges for standard local or 
interline tickets, for excursion, convention and 
other fares for special occasions, for commutation 
and other multiple forms of tickets, for extra fares 
on limited trains, for club car charges, for excess 
baggage rates, for surcharge upon passengers in 
sleeping and parlor cars, and for the transporta- 
tion of milk and cream authorized by this Commis- 
sion to be charged and taken in interstate com- 
merce, and which are now being charged and 
taken, were charged and taken in intrastate com- 
merce within the State of New York, and the 
amounts which will be received by these carriers 


241 


242, 


243 


245 


246 


24 


aj 


248 


249 


250 


o2 


Paper 3 
for such transportation within the State of New 
York under the fares and charges as they now 
exist for each and all of the different kinds of 
transportation enumerated above, and are now 
being charged and taken, and as they must be 
charged and taken under the decision of the Pub- 
lic Service Commission of the State of New York 
above quoted, is many millions of dollars per 
year, and that the decision of the said State com- 
mission in forcing the railroads herein named and 
referred to to charge rates of fare within the State 
of New York for intrastate travel less than the 
rates authorized by this Commission results and 
will result in an undue and unreasonable advant- 
age, preference or prejudice between persons and 
localities in intrastate commerce on the one hand, 
and interstate commerce on the other, and an un- 


due, unreasonable and unjust discrimination 


against interstate commerce in that, among other 
things, unless the railroads named and referred 
to herein are permitted to charge for the trans- 
portation of passengers and milk and cream in- 
trastate, within the State of New York, fares and 
rates prescribed in the said decision and order of 
this Commission, carriers within the eastern 
group will earn less than six per cent upon the 


aggregate value of their property within such 


group held and used in the service of transporta- 
tion with the result that the provisions of the 
Transportation Act would not be carried out. 
That the provisiuns of the Transportation Act 
contemplated that rates and fares shall be ad- 
justed with reference to the aggregate value of 
the property of the carriers in the groups de- 


ah) 


Paper 3 251 
termined upon by this Commission and not with 
reference to the value of the property of any par- 
ticular carrier in any particular state. That the 
decision of the Public Service Commission of the 
State of New York, above quoted, disclaims au- 
thority in the Commission to deal with the dis- 
crimination against interstate commerce result- 
ing from lower fares in New York and suggests 
no proper basis for further proceedings before 
State authorities with reference to the proposed 
increase in passenger fares 


252 


VII. And your petitioner further shows, in its 
own behalf and in behalf of all the railroad com- 
panies named and referred to hereinabove, that 2953 
the main line of the railroad of the New York 
Central Railroad Company extends from New 
York to Buffalo, in the State of New York, and, 
as to that part of its line, is entirely within the 
said state; that other railroad lines between New 
York and Buffalo are the lines of the Lehigh Val- 
ley Railroad Company, the Erie Railroad Com- 254 
pany, the Delaware, Lackawanna & Western Rail- 
road Company, the New York, Ontario & Western 
Railway Company, and the line of the West Shore 
Railroad Company, which is a leased line of the 
New York Central Railroad Company and is op- 
erated by said company; that the line of each 
of the said last named railroad companies be- 
tween New York and Buffalo passes through 
states other than the State of New York, and that 
the transportation of passengers between such 
points over each of such named lines is transpor- 
tation in interstate commerce; that after August 
26, 1920, the rate of fare for passengers between 

14 


bo 


59 


256 


257 


258, 


259 


260 


D4. 


Paper 3 
New York and Buffalo, upon the line of the New 
York Central Railroad Company, will be three 
cents per mile and no more, it being entirely an 
intrastate journey; that the rate of fare for pas- 
sengers between said points upon the line of each 
of the other named railroad companies, including 


the line of the West Shore Railroad Company 


operated, as aforesaid, by the New York Central 
Railroad Company, will be 3.6 cents per mile, such 
transportation being interstate transportation 
and that the rate of fare over the line of the New 
York Centrai Railroad Company will be $13.16, 
between said points, as compared with the rate of 
fare over each of the other lines of $14.36, thus 
constituting an obviously undue, unreasonable 
and unjust discrimination against interstate com- 
merce and in favor of intrastate commerce 

That after August 26, 1920, the surcharge of 
fifty per cent of the charge for space in sleeping 
and parlor cars will be effective upon the lines 
of the railroads running interstate between New 
York and Buffalo, and will not be effective upon 
the line of the New York Central Railroad Com- 
pany, thus furnishing a further undue, unreason- 
able and unjust discrimination against interstate 
commerce. 
~ That such instances of discrimination occur be- 
tween many other points within the State of New 
York reached by the West Shore Railroad and by 
each of the other railroad companies named and 
by other railroad companies. That a few of such 
instances are the following: Between New York 
and Albany are the lines of the New York Central 
Railroad Company and of the West Shore Rail- 


D0 


Paper 3 
road Company, one at intrastate line and the 
other an interstate line. That between New York 


261 


and Utica extend the lines of the New York Cen- 


tral Railroad, an intrastate road, and of the West 
Shore Railroad and of the New York, Ontario & 
Western Railway, both interstate roads. Be- 
tween. New York and Syracuse are the lines of the 
New York Central Railroad, an intrastate line, 
and the Delaware, Lackawanna & Western Rail- 
road and the West Shore Railroad, interstate 
lines. That between New York and Rochester 
extend the lines of the New York Central Rail- 
road, an intrastate line, and the Lehigh Valley 


Railroad, the Erie Railroad and the West Shore . 


Railroad, interstate ines. That passengers trav- 
eling upon the line of the New York Central Rail- 
road between each of such points travel in intra- 
state commerce; passengers traveling upon each 
of the other named lines between said points 
travel in interstate commerce, the rate for intra- 
state travel being three cents per mile and for the 
interstate travel 3.6c. per mile. And that your 
petitioner asks leave to give proof of other in- 
stances than those named herein. 

That after August 26, 1920, the rates for the 
transportation of milk and cream intrastate 
within the State of New York will be 20 per cent 
less than the rates for the transportation of milk 
and cream interstate; that to mention but one in- 
stance, large quantities of milk and cream are 
brought into the City of New York by the New 
York Central Railroad from points within the 
State of New York and from points without the 
State of New York; that the increased rates 


262 


263 


264 


265 


266 


267 


268 


269 


270 


o6 


Paper 8 

charged for the transportation of such milk and 
cream on points from without the State over the 
rates charged for the transportation for such 
commodities from points within the State, con- 
stitutes, and will constitute an undue and un- 
reasonable advantage, preference or prejudice as 
between persons or localities in intrastate com- 
merce on the one hand and interstate commerce 
on the other hand, and an undue, unreasonable 
and unjust discrimination against interstate com- 
merce; that milk and cream are transported to the 
City of New York mterstate over the lines of the 
railroad of the Delaware, Lackawanna & Western 
Railroad Company, the Lehigh Valley Railroad 
Company, the Erie Railroad Company, the New 
York, New Haven and Hartford Railroad Com- 
pany, and the New York, Ontario & Western Rail- 
way Company, many of the points from which 
such commodities are transported over each of 
such railroad lines interstate being points compet- 
itive with points situated upon the line of the New 
York Central Railroad Company over which the 
transportation to the City of New York is intra- 
state, and that the higher rates charged for the 
transportation of these commodities over these 
lines interstate as against the charge permitted 
for the transportation intrastate constitutes an 
undue and unreasonable advantage, preference or 
prejudice, as between persons or localities in in- 
trastate commerce on the one hand and interstate 
commerce on the other hand, and causes an undue, 
unreasonable and unjust discrimination against 
interstate commerce. 


( 


a | 


e 


Paper 3 

That the rates on milk and cream, prior to the 
decision of this Commission in Ex Parte 74, were 
those fixed by this Commission in its decision in 
Case No. 8558, Milk and Cream Rates in New 
York City, reported in 45 I. C. C., 412, for inter- 
state transportation and applied for intrastate 
transportation within the State of New York in 
order to secure a uniformity in rate between in- 
terstate and intrastate rates, and as said rate was 
increased under General Order No. 28 of the Di- 
rector General. 

Wherefore your petitioner prays, on its own be- 
half and on behalf of the carriers named herein 
and referred to herein, operating within the State 
of New York, that this honorable commission, act- 
ing under the powers conferred upon it by section 
15 of the Interstate Commerce Act as amended, 
institute an investigation as to the passenger 
fares and charges for intrastate transportation 
within the State of New York and as to the 
charges for the transportation of milk and cream 
within said state; that it cause the State of New 
York to be notified of the proceeding and that an 
order be entered, declaring discriminatory, unjust 
and unlawful any fares or rates or charges initi- 
ated by the President during Federal control or 
required to be apphed by any state authority to 
the transportation of passengers and of milk and 
eream within the State of New York, less than 
those provided in the said order of this Commis- 
sion in ex parte 74, and prohibiting preferences 
and discriminations by requiring the establish- 
ment of intrastate passenger rates and fares and 
charges for the transportation of milk and cream 


15 


271 


272 


273 


274 


275 


o8 


276 | Paper 3 
within the State of New York on the same level 


and basis as those authorized by this Commis- 
Slon in ex parte 74, and prescribing fares and 
charges or the maximum or minimum, or the max- 
imum and minimum fares and charges thereafter 
to be charged on intrastate passenger traffic and 
the intrastate. transportation of milk and cream 


ate within the State of New York. 


Respecifully submitted, 


CHARLES C. PAULDING, 

CiypE Brown, 

Francis I. Gowsn, 

Grorce EF’. BrowNeELt, 
278 Epwarp G. BuckLanp, 

R. W. Barrett, 

W.'S. JENNEY, 

Water C. Noyes, 

J. F. Kany, 

C. L. ANDRUS, 


Counsel. 
279 


280 


59 
PAPER 4 281 
BEFORE THE 
Interstate Commerce Commission 


In tHE Marrer 
of the 282 


Rates of Fare for Passengers 
Charged and Taken upon the 
Line of the New York Central 
Railroad Company in the State 
of New York and Other States. 


Docket 
No. 11623 


New York, N. Y., September 13, 1920. oa 
10 o’clock a. M. 
Before: 
Witspur La Ros, Jr., Chief Examiner. 
Met pursuant to notice. 
284 


Appearances: 


Charles C. Paulding, Grand Central Terminal, 
New York city, appearing for the New York Cen- 
tral Railroad Company; Delaware, Lackawanna 
and Western Railroad Company, New York, New 
Haven and Hartford Railroad Company, and 285 
Boston and Maine Railroad Company. 

Joseph F. Keany and Alfred A. Gardner, Penn- 
sylvania Station, New York city, appearing for 
the Long Island Railroad Company. 

H. A. Raylor, 50 Church street, New York city, 
appearing for the Erie Railroad Company; New 


286 


287 


288 


290 


60 


Paper 4 
Jersey and New York Railroad Company, and 
Bath and Hammondsport Railroad Company. 

C. L. Andrus, 3714 Grand Central Terminal, 
New York City, appearing for the New York, 
Ontario and Western Railway Company. 

Willam L. Barnett, New Haven, Conn., appear- 
ing for the New York, New Haven and Hartford 
Railroad Company; Central New England Rail- 
way Company, and Boston and Maine Railroad 
Company. 

‘Alfred G. Hagerty, 717 Munsey building, Wash- 
ington, D. C., appearing for the Ulster and Dela- 
ware Railroad Company. 

R. W. Barrett, 148 Liberty street, New York 
city, appearing for the Lehigh Valley Railroad 
Company. 

Charles L. Hunter, 1438 Liberty street, New 
York city, appearing for the New York Central 
Railroad Company. 

Henry Wolf Bikle, 231 Broad Street Station, 
Philadelphia, Pa., appearing for the Pennsyl- 
vania Railroad Company. 

W. D. Waldron, 32 Nassau street, New York 
city, appearing for the Delaware and Hudson 
Company. 

John Adikes, 200 Fulton street, Jamaica, New 


York city, appearing for the Jamaica Board of 


Trade. 

Vincent Victory, Assistant Corporation Coun- 
sel; Municipal building, New York city, appearing 
for the city of New York and its inhabitants. 

John Rolley Clark, Jr., 120 Broadway, New 
York city, appearing for the Chamber of Com- 
merce of the Borough of Queens. 


61 


Paper 4 

Ledyard P. Hale, Albany, N. Y., appearing for 
the Public Service Commission, State of New 
York, Second District. 

Edward G. Griffin, Albany, N. Y., Deputy 'At- 
torney-General, appearing for the State of New 
York. 

John A. Mullen, New York city, N. Y., appear- 
ing for the Public Service Commission, First 
District. 

PROCEEDINGS 


Exam. LaRoe: Gentlemen, the Interstate 
Commerce Commission has assigned for hearing 
this morning, Docket No. 11623, In the Matter of 
Interstate Rates and Fares of the New York Cen- 
tral Railroad Company, and Other Carriers in 
the State of New York. 


Who appears for the State of New York? 


Mr. Hale: Mr. Griffin, for the Attorney-Gen- 
eral, Deputy Attorney-General of the State, and 
Mr. Hale, myself, for the Public Service Com- 
mission of the Second District, which I believe in 
this State includes all steam railroads. 

Exam. LaRoe: Who appears for the carriers? 

Mr. Paulding: I appear for practically all the 
carriers, with the exception of the Pennsylvania 
railroad and the Delaware and Hudson, who are 
represented by their own counsel. 

Mr. Waldron: I appear for the Delaware and 
Hudson Company, W. D. Waldron. 

Mr. Bikle: Mr. Bikle, for the Pennsylvania. 

Exam. LaRoe: Are there any other appear- 
ances for the carriers? 

Mr. Keany: The Long Island Railroad Com- 


pany appears by Mr. Joseph IF’. Keany. 
16 


291 


292 


293 


294 


296 


297 


298 


299 


399 


6% 


Paper 4 
Exam. LaRoe: Are there any other appear- 
ances? 
Mr. Hagerty: A. G. Hagerty, for the Ulster 
and Delaware. 


Mr. Clark: I appear for the Queens Borough 
Chamber of Commerce, John Holley Clark, Jr. 


Mr. Victory: John P. O’Brien, Corporation 
Counsel of the city of New York, by Vincent Vic- 
tory, Assistant Corporation Counsel. 


Mr. Andrus: C. L. Andrus appears for the 
New York, Ontario and Western. 


Exam. LaRoe: Are there any other appear- 
ances? 
(No response.) 


Exam. LaRoe: The issues are pretty clearly 
defined in the Commission’s order, dated Sep- 
tember 8th, part of which I will read: 


‘In the Matter of Intrastate Rates and 
Fares of the New York Central Railroad 
Company and other carriers in the State of 
New York. 

‘‘ It appearing, That by order in Ex Parte 
74, Increased Rates, 1920, 58 I. C. C. 220, 
carriers operating within the State of New 
York were permitted to increase intrastate 
passenger fares and charges 20 per cent, ex- 
cess baggage rates 20 per cent, surcharge 
upon passengers in sleeping and parlor cars 
50 per cent and the rates on milk and cream 
when carried on passenger cars 20 per cent; 

‘¢ Tt further appearing, That a petition has 
been filed on behalf of all the steam railroads 
operating in the State of New York averring 
that the State of New York Public Service 
Commission, Second District, by report and 
order promulgated on the 19th day of August, 
1920, refused to permit increases for intra- 


63 


Paper 4 
state traffic similar to those permitted by 
this Commission for interstate traffic as set 
forth in the preceding paragraph; 

‘‘ It further appearing, That said petition- 
ers allege that the observance by themselves 
of said order of the New York Public Service 
Commission, Second District, will cause and 
result in undue and unreasonable preference 
and advantage to intrastate commerce, to the ® 
undue and unreasonable prejudice and dis- 
advantage of interstate commerce and will 
result in unjust and unreasonable discrimina- 
tion against interstate commerce. 

‘And it further appearing, That by the 
said petition there have been brought to is- 
sue rates, fares and charges imposed by the 
authority of the State of New York; 

‘* Tt is ordered, (1) That an investigation 
be, and it is hereby instituted to determine 
whether the rates, fares and charges required 
by the State of New York Public Service 
Commission, Second District, to be main- 
tained by said railroads, cause or will cause 
any undue or unreasonable advantage, pref- 
erence, or prejudice as between-persons or 
localities in intrastate commerce on the one 304 
hand and interstate commerce or foreign 
commerce on the other hand, or any undue, 
unreasonable or unjust discrimination against 
interstate or foreign commerce; and as to 
what rates, fares and charges, if any, or what 
maximum or minimum, or maximum and 
minimum shall be prescribed to be charged 
by the petitioners, in order to remove such go5_ 
advantage, preference, prejudice or discrim- 
ination, if any, as may be found to exist. 


gy 
2 
SG) 


303 


At this point I should say, perhaps, that [ am 
advised that Mr. Smith, the General Passenger 
Agent of the New Haven Railroad, intended to 
be here, but his train will be somewhat late. I 


306 


307 


308 


309 


310 


64 


Paper 4 
would like to determine informally about how 
long this proceeding is going to last. 
(Here ensued an informal discussion off the 
record. ) 


Mr. Hale: I think perhaps now is the time to 
interpose objection, but it is fair that the Inter- 
state Commerce Commission should be duly ap- 
praised of the position of the Public Service 
Commission, and Mr. Griffin can speak, of course, 
with regard to the State of New York. We object 
to any proceeding or any evidence or any hear- 
ing in this matter, because there is not any proper 
complainant. In other words, no person inter- 
ested in interstate as opposed to state rates has 
made any complaint of the state raise. I do not 
understand that it is a proceeding instituted of its 
own motion by the Interstate Commerce Com- 
mission, but that it is a proceeding instituted on 
motion of the carriers, the New York Central and 
other railroads. I do not think they can raise 
that point, and especially as they have not asked 
the state to increase their local rates. Now, in all 
of this time that the New York Central has had 
and the other railroads —JI speak of the Central 
as perhaps governing all of them —it is our larg- 
est sinner in the state, because it is the largest 
railroad in the state, and because of the statute 
of the state, which has been in existence since be- 
fore the New York Central Railroad — now, there 
has not been a suggestion to the Public Service 
Commission that the 2-cent rate, for example, for 
way passengers between Albany and Buffalo was 
insufficient, either to pay for the service or to 
vield an income on the cost of the railroad or to 
vield a reasonable return on the value of the prop- 


65 


Paper 4 

erty employed in passenger transportation, and 
for that reason we claim that the Interstate Com- 
merce Commission ought not to be moved to this 
investigation. The Examiner stated he would 
like to know about how long the hearing is going 
to take. We are not prepared with any evidence 
at all and do not expect to introduce any, except 
on cross examination if there is any evidence 
that we ought to have which would be easily sup- 
plied by the railroad people present. 


Exam. La Roe: Your objection will be noted on 
the record, Judge Hale. Just to get the record 
clear, am I laboring under a misapprehension 
when I think that the carriers have petitioned the 
Public Service Commission of the Second District 
for authority to put in the wncreased fares? 


Mr. Hale: They petitioned for authority to put 
in the increased fares because, and only because 
they were put in by the Interstate Commerce Com- 
mission. They want us to O. K. for State rates 
exactly what the Interstate Commerce Commis- 
sion did. 


Hxam. LaRoe: And your position is, as I un- 
derstand you, that you feel that the carriers have 
failed to establish the insufficiency of the present 
fares under the language of ithe statute. 


Mr. Hale: They have introduced no evidence 
bearing on that question, as I understand it, and 
certainly they have not asked the Public Service 
Commission to inerease the rates. 

Now, I want your assent to my assertion, repre- 
senting the New York State Commission, that the 
statute of New York has vested the Public Ser- 


17 


311 


312 


313 


314 


315 


316 


66 


Paper 4 
vice Commission of the Second District with suffi- 
cient power to enable them, from proper proof, 
to raise the passenger rate to 3.6 by any of the 
tests which have now become established in the 
United States, the reasonable income on the value 
of the property in public use, or any other test 


317 that you please that has been recognized by the 


318 


319 


320 


Supreme Court of the United States, and fur- 
nishes the basis of its daily work by the Inter- 
state Commerce Commission, especially under the | 
valuation scheme of the Interstate Commerce 
Commission There has not been proffered to us, 
not even indirectly, a proposition to increase these 
rates so that the State rates should be equal to the 
interstate rates. There won’t be any quarrel, as 
a matter of fact, on my part that when I went to 
Chicago the other morning and got on at Albany 
and rode to Buffalo, and paid 3.6, and my friend 
got on the train and rode to Buffalo and paid 3 
cents, that there is a difference between the State 
and interstate rates. We do not contend there is 
no difference. We do not contend that that may 
not constitute a discrimination, but nobody has 
asked us on any basis whatever, either from actual 
value of service or actual financial need of the 
carrier to increase it. 


Exam. LaRoe: As I understand the carriers’ 
position, your position on the subject of discrimi- 
nation is that as a matter of discrimination be- 
tween intrastate commerce on one hand and in- 
terstate commerce on the other, it is a matter of 
determination by another tribunal, and you feel 
the carriers should establish it before vou put the 
insufficiency of the sresent rates — 


67 


Paper 4 
Mr. Hale: I might answer yes, and yet I think 321 
due to you, representing the Interstate Com- 
merce Commission, I should go a step further and 
to deny the authority of Congress, under the Con- 
stitution of the United States, to do what it has 
done respecting the relation between interstate 


and State rates. 


| 22 
Exam. LaRoe: You mean by that, that you ; 


deny the power of Congress to vest in the Inter- 
state Commerce Commission authority to require 
the removal of undue prejudice, if found to exist 
between State and interstate rates. 


Mr. Hale: I always lke to state the question 
exactly as I see it. My point is that I believe that 393 
the State still has under the Constitution the 
power to determine in a state what is a reasonable 
rate for a railroad in the carriage of freight or 
passengers. Now, I am aware of the Shreveport 
decision. JI am aware of the Illinois case. I am 
aware of the Minnesota rate cases. Of course, we 
have got to accept this as part of the jurispru- 9394 
dence of the United States, but to go beyond that 
and branch out entirely and to give to the Inter- 
state Commerce Commission the power over local 
rates, absolutely to fix them, and the only stand- 
ard of doing that which is fixed by the Interstate 
Commerce Commission, that we object to, and we 


hope to prevail ultimately on that contention. 395 


Exam. LaRoe: You have stated your position 
so fully and freely that I hesitate to ask you to de- 
velop it further, but do you distinguish between 
the matter of reasonableness or the sufficiency of 
the rates and the matter of discrimination? 


68 


326 Paper 4 
Mr. Hale: I do not quite know where we would 
have to argue that ultimately. Of course, I must 
concede that where a rate fixed by a state, is a 
direct interference with the power of Congress, 
as declared now in the Shreveport and other cases, 
or perhaps not the power of Congress declared 
397 there, but the result of the provisions of the Con- 
stitution, giving Congress the power over inter- 
state commerce, we come right up to the square 
conflict there and of course the State has got to 
yield. It cannot help it, but I do want in all legit- 
imate and proper ways to urge upon the Inter- 
state Commerce Commission, of course, through 
you, that Congress has not in the first place — 
that it has not done it; in the second place, that 
if it has tried to do it, it could not remove all jur- 
isdiction of the State of New York over the rates 
of the New York Central Railroad and other 
railroads. 


Mr. Paulding: I think it is only fair to state 
399 for the purpose of the record — 


Mr. Griffin: May I put in my objection? 


Mr. Paulding: Pardon me just a moment. In 
the hearing before the Public Service Commis- 
sion, upon the petition of the carriers to put in 
the tariffs blanket supplements, showing the in- 

399 creased rates, the entire record before the Inter- 
“~~ state Commerce Commission was offered in evi- 
dence and accepted. | 


Mr. Hale: I assume that is true. I was not 
there. 


Exam. LaRoe: Were they physically filed with 
the New York Commission? 


69 


Paper 4 
Mr. Paulding: The New York Commission had 
a copy in their possession, and that prompted us 
to make the formal offer, and they stated they 
would use that copy. 


Mr. Hale: There won’t be any point about the 
physical presence, if that is true, of course. 


Hxam. LaRoe: May I ask if any one else would 
like to be heard? 


Mr. Clark: I would like to make one additional 
objection to what Judge Hale has said, particu- 
larly as regards the Long Island Railroad and the 
City of New York, in which the people of Queens 
are particularly interested, of course. The Long 
Island Railroad has not interstate passenger traf- 
fic at all. Of course, the force of Mr. Hale’s argu- 
ment about the jurisdiction of the Interstate Com- 
‘merce Commission and Congress, itself, is par- 
ticularly forceful in the case of the Long Island. 
There are no ways by which the Long Island rates 


could directly compete with the interstate rate,. 


under the theory of the Minnesota Rate cases and 
it seems to me that if the Interstate Commerce 
Commission is to take jurisdiction of the local 
rates on what is really a rapid transit railroad in 
many respects, which has a majority of its traffic 
in the city of New York, and in many cases runs 
parallel to and competes with the city rapid tran- 


‘sit lines, why then I say that if this. Transporta- © 


tion Act authorizes any such interference with 

local rates on the Long Island Railroad, it ought 

to also authorize its interference with the local 

rates on the city rapid transit lines. You could 

just as well increase the five-cent fare on the sub- 
18 


331 


332 


333 


334 


336 


337 


338 


339 


340 


70 


Paper 4 

way as you could increase the rates on the Long 
Island Railroad. That is the preliminary objec- 
tion I make, and then if the court desires or 
wishes to continue the Long Island Railroad in 
this hearing, why, I want to point out that the 
rates on the Long Island Railroad have always 
been higher than those on the New Jersey roads; 
that in spite of the 20 per cent increase granted 
to the New Jersey railroads, the Long Island 
commutation rates to the Pennsylvania station 
are still higher than those on the New Jersey 
roads. The fifty-trip rates on the Long Island 
Railroad are higher than those in the New Jersey 
railroads, and in many cases the single and 
round-trip fares on the Long Island Railroad are 
higher than on the New Jersey roads with their 
increase. 


Exam. LaRoe: Are there any other prelim- 
inary remarks? 


Mr. Griffin: If the Examiner please, on behalf 
of the Attorney-General, instead of joining Judge 
Hale’s objections, I want to make some of my 
own. I object first on the ground that the peti- 
tioners may not be heard here, complaining 
against any discrimination as between interstate 
and state rates; that only some person who suf- 
fers from that discrimination may be heard. 


Exam. LaRoe: I do not have a copy of the new 
law before me, but as I recall it, it specifically 
authorizes a carrier to file such a petition. Am I 
incorrect in that? 


Mr. Paulding: I will read it. 


“fi 


Paper 4 
My. Griffin: Will you wait until I finish? 


Mr. Paulding: Yes. 


Mr. Griffin: And secondly, I object to this peti- 
tion, upon the ground that there can be no dis- 
crimination in passenger rates where a passen- 
ger steps off at a station and buys a state ticket. 

Thirdly, upon the ground that so far as the 

two-cent fare on the New York Central is con- 
- cerned, and so far as their rates are concerned, 
they constitute charter contracts which Congress 
may not by its authority, delegated to the Inter- 
state Commerce Commission, impair. 


Exam. LaRoe: Those objections will be noted 
in the record. 


Mr. Paulding: I wish to call attention upon 
the record to the language of section 13. It is in 
the third subdivision of section 13 of the Inter- 
state Commerce Act: 

- “* Tn any investigation upon the petition of 
the carrier concerned, which petition is 
hereby authorized to be filed ’? — 

Exam. LaRoe: I think that is enough. That 
is part of the law I had in mind. 


Mr. Victory: The corporation counsel of the 
city of New York joins in the objection of coun- 
sel for the Public Service Commission of the 
Second District, Mr. Griffin and also Major Clark. 


Exam. LaRoe: Now, apparently with a little 
pressure we shall be able to finish today. 


Mr. Taylor: On behalf of the Erie Railroad, 
I would like it known before you start that Mr. 


341 


343 


345 


346 


“847 


348 


72 


Paper. 4 
Paulding’ represents some witnesses who will 
speak jor us, as well as for other railroads, but 
we may find it necessary to have some short time 
to present some facts peculiar to the Hrie Rail- 
road. 


Exam. LaRoe: Very well. For the informa- 


tion of those present I will say, although I assume 


it to be generally known, that 1a very similar pro- 
ceeding is now pending with regard to the rates . 
in the State of Illinois. I think that that 1s now 
in course of hearing in Chicago, although I am 
not generally advised. 


Mr. Hale: Itis. I was there on Saturday. 
Exam. LaRoe: Mr. Paulding, are you ready 
to proceed? 


Mr. Paulding: I do not know that a formal 
opening 1s necessary im a proceeding before the 
Commission, but briefly I will say this, Mr. 


Examiner: In the State of New York there are 


349 


300 


58 steam railroads. Of these, ten have no passen- 
ger revenue. Of the remaining forty-eight, thir- 
teen have total passenger revenues of over a mil- 
lion dollars a year. The main roads concerned 
in that revenue are the New York Central, the 
Erie, the Delaware, Lackawanna & Western, the 
Lehigh Valley, the Long Island, the Ontario & 
Western, the New Haven Railroad, Buffalo, 
Rochester & Pittsburg and Delaware & Hudson. 
The other interstate roads doing a business of 
over a million dollars have a small mileage in 
New York. The intrastate business of the roads 
I have named is very large. It amounts to about 
fifty million dollars a year, roughly speaking. 


13 


Paper. 4 
The milk and cream business is very large, 
amounting to several million dollars a year, which 
I will prove. The surcharge upon Pullman tick- 
ets, which has been denied by the Public Service 
Commission would amount to a great deal a year, 
as prior to the time the Pullman Company was 


allowed 20 per cent increase on their charges, their \, 


intrastate income in the State of New York for 
local tickets was about $1,400,000 a year. The 
interstate railroads in the State — all railroads in 
the State are interstate railroads, excepting as to 
New York State traffic on the New York Central, 
which business ‘New York and Buffalo is entirely 
an intrastate line, New York being selected as one 
end of the State and Buffalo being at the end of 
the Great Lakes —the New York Central is an 
intrastate line. The West ‘Shore line, a leased 
line of the New York Central, is an interstate 
line, and parallels the New York Central for its 
entire length. The Lehigh Valley, Delaware, 


Lackawanna & Western and Erie are all inter-: 


state lines, going through the states of New Jer- 
sey and Pennsylvania and passing in and out of 
New York and Pennsylvania. 


Exam. LaRoe: May I interrupt on one point? 
Did you say the New York Central line between 
Albany and Buffalo? 


Mr. Paulding: Between New York and Buffalo. 


Exam. LaRoe: Of course, that portion of the 
line is an intrastate line, but that is not all 
there is. 


Mr. Paulding: I am speaking entirely as to New 
York state. 
[9 


352 


354 


300 


14 


poe Paper 4 


Exam. LaRoe: I do not get the force of the dis- 
tinction you are drawing, because the West Shore 
Railroad is an intrastate line with respect to that 
portion of the line that is in the state. 


Mr. Paulding: Not as between New York and 


357 Buffalo. 


Exam. LaRoe: No, not as between New York 
and Buffalo. 


Mr. Paulding: That was the point I was trying 
to make. 
Kixam. LaRoe: I see. 


358 
Mr. Paulding: There are other points in the 


state of New York which have the same geogra- 
phical position, not only in the southern part of 
the state, but in the western part of the state, the 
central and northern part of the state. 


Exam. LaRoe: How many of the railroads that 
359 are here involved are physically totally intrastate 
carriers? 


Mr. Paulding: One. 
Exam. LaRoe: Which one is that? 


‘Mr. Paulding: New York Central Railroad. 

That is as to its New York state business. Of 

360 course the New York Central Railroad, runs 
through seven states. 


Exam. LaRoe: Is there any railroad that is 
here respondent that has its whole line within 
New York state? 


Mr. Paulding: Oh, yes, the Ulster & Delaware. 


(i) 


Paper 4 361 
Mr. Taylor: I appear for the Bath & Ham- 
mondsport, a small branch of the Erie. 


Mr. Paulding: There are several roads in this 
proceeding which are not only entirely within the 
state of New York, but the great bulk of their 
income — 


Exam. LaRoe: Mr. Clark made that statement 362 
clearly in regard to his road, and I was just won- 
dering to what extent that is true of the others. 


Mr. Paulding: That is true as to perhaps half 
of the forty-eight roads which I have mentioned, 
but they all do an interstate business. 


Mr. Clark: The Long Island does not. 363 


Mr. Gardner: The Long Island does an inter- 
state business. The Long Island does an inter- 
state passenger business. The tariffs show it. 


‘Mr. Paulding: With that short opening I will 
eall Mr. Porter. 
364 
LeRoy B. Portser was thereupon called as 
a witness, and having been duly sworn, testi- 
fied as follows: 


Direct Examination: 


Q. (By Mr. Paulding.) What is your occupa- 
tion, Mr. Porter? A. Assistant Controller of the 
New York Central. 

Q. Have you secured from a number of rail- 
roads in the state of New York, statements of 
their intrastate revenue in the state for certain 
periods as to passenger, and as to milk and cream 
divided in that way? A. Yes, sir, I have. 


365 


16 


366 Paper 4 

@. What rates have you? A. I have the Penn- 
sylvania; the Delaware, Lackawanna & Western; 
the New York, Ontario & Western; Long Island; 
Buffalo, Rochester & Pittsburg; the New York 
Central; the Erie; the Lehigh Valley; the New 
York, New Haven & Hartford; the Central of 
New England and the Delaware & Hudson. — 

Q. (By Exam. LaRoe.) Do you have that in ex- 
hibit form? A. Why, some of them only came in 
this morning and I haven’t had them typewritten. 


367 


Mr. Paulding: I have given Judge Hale a copy 
of it, so far as it was prepared up to ten o’clock 
this morning. 


368 Hixam. LaRoe: Will you file it later as an ex- 


hibit? 
Mr. Paulding: Yes. 


(The statement was thereupon received in evi- 
dence, marked ‘* Defendants’ Exhibit No. 1, Wit- 
ness Porter,’’ and is forwarded herewith.) 


369 
Q. (By Mr. Paulding.) Is that divided as to 
passenger revenue, so-called, and milk and cream 
revenue? A. Yes, sir; it is. 


Mr. Hale: I do not suppose, Mr. Examiner, it 1s 
necessary to repeat? Our point is considered? 


Exam. LaRoe: Your fundamental objection will 
370 »o all through the proceedings. Proceed, please. 


Q. (By Mr. Paulding.) What was the total in- 
trastate revenue, passenger, of these lines for the 
calendar year 1919 as you have secured the fig- 
ures? A. Why, I have not got the total passen- 
ger, Mr. Paulding. I only have the total as to all 


17 


Paper 4 
of the revenue, which includes the passenger, ex- 
cess baggage and milk and cream, and the total of 
that for the year ended June 30th, 1920, was $55,- 
605,322.48. ) | 
(). Have you secured from the Pullman Com- 
pany a statement of their intrastate earnings in 


the state of New York during the year 1919?. 


A. Yes, sir; we have a statement from the Pull- 
man Company, which shows that their intrastate 
earnings in the state of New York for the year 
ended December 31st, 1919, was a total of $13,- 
000,007.00, and that was before they had any bene- 
fit of the 20 per cent increase in Pullman fares. 


Q. Have you figures from the Pullman Com- 
pany, or have you not, as to the six months fig- ° 


ures for the first six months of 1920, which in- 
cludes two months of the 20 per cent increase? 
A. Yes, sir. 

Q. Where are those and what are they? A. The 
total of those for the six months to June 30th, 
1920, is $810,898.14. 

Q. Now, take these three figures which you 
have given, ‘Mr. Porter, the passenger revenues 
intrastate in the state of New York, and the Pull- 
man figures, will you say what, if the rate of in- 
erease authorized by the Interstate Commerce 
Commission had been in effect during the period 
you have covered, would have been the difference 
in the figures you have given and the figures as 
they would be by adding 20 per cent? <A. Yes, 
sir; on the passenger, excess baggage and milk 
and cream, the effect is a loss of $11,121,066. 


Q. (By Exam. LaRoe.) That is on the basis 
of the year? A. On the basis of the business 
done for the year ended June 30th, 1920. 

20 


‘371 


as 
New 


374 


375 


— 3876 


377 


378 : 


380 


18 


Paper 4 

Q. May that then fairly be regarded as the an- 
nual amount that is involved in this proceeding? 
Does that represent the annual difference {be- 
tween what the rates would be, if they were on 
an interstate basis as compared with what they 
are on the intrastate basis? A. Yes, sir; assum- 
ing of course that the same amount of business is 
done throughout. 

Q. I just wanted to get in my mind an idea as 
to the amount in controversy here, and as I un- 
derstand you it is in the neighborhood of eleven 
million dollars a year? A. That is on the passen- 
ger, excess baggage and milk and cream, and in 
addition to that the loss on the surcharge from 
the figures which have been furnished by the 
Pullman Company would mean about eight hun- 
dred thousand dollars additional. 

Q. About twelve million dollars, in round fig- 
ures? A. About twelve million dollars, yes, sir. 

@. Do you have any information showing how 
g that figure of fifty-five million dollars which you 
9 pave for the intrastate business, compares with 
the total interstate business into and out of the 
state of New York? A. I have not that, only for 
the New York Central. I would say that the New 
York Central’s intrastate business is about 35 
per cent. 

Q. That is to say—. A. Of their total passen- 
ger business in the state of New York —their 
total passenger business in the state of New York 
is about 70 per cent of their total passenger rev- 
enue. 

(). Well, now, let me get that. That is import- 
ant, if true. 


79 


Paper 4 
Mr. Paulding: I was coming to that. 


Kixam. Le Roe: Pardon the interruption. Per- 
haps I had better let you proceed. 


Q. (By Mr. Paulding.) Now, your figures have 
been based upon the assumption that the traffic is 
the same? A. Yes, sir. 

Q. And without taking into account any differ- 
ence that may be made as between interstate and 
intrastate fares, by a reduced rate or an increased 
rate? A. Yes, sir. 

Q. The Examiner has asked you some ques- 
tions as to the interstate rates. I show you a 
paper. This is a carbon copy. I have used the 
original and I ask you if you know what that is. 
A. This is a statement of the annual and quar- 
terly revenues received from milk and passenger 
train service on steam railroads reporting to the 
Public Service Commission of New York for the 
year ending December 31st, 1919, and for the 
quarter ended June 30th, 1920. 

Q. That is for all the steam railroads in the 
state reporting to the Public Service Commission, 
is it not? A. As far as I know, it is. 


Mr. Paulding: I will say for the information 
of the Examiner this is furnished me by the Pub- 
lic Service Commission. 


381 


382 


383 


384 


Q. (By Mr. Paulding.) That shows the total 385 


revenues of all of the roads — the total passenger 
revenues for the year 1919 for all of the roads 
reporting to the Public Service Commission? A. 
Yes, sir. 

Q. Making the total about $315,000,000? A. Yes. 


80 


386 Paper 4 
Mr. Paulding: That is all I wish to ask. I will 


offer that and I will furnish copies. 


(The statement was thereupon received in evi- 
dence, marked ‘‘ Defendants’ Exhibit No. 2, Wit- 
ness Porter ’’, and is forwarded herewith.) 


387. QQ. (By Exam. LaRoe): That figure includes all 
revenue, both state and interstate, does it— all 
passenger revenue, both state and interstate? A. 
Yes, sir. ) 

Q. For example, includes interstate revenue — 


Mr. Paulding: That is the total passenger rey- 
enues. 


‘388 Exam. LeRoe: The question that I asked was 


whether you have a figure, showing the total pas- 
senger revenue, interstate between New York and 
other states. 


Mr. Paulding: No; the only figures we have 
are the intrastate figures for New York and these 
389 total figures. 


Exam. LaRoe: Of course, the only interstate 
passenger business that is here in issue is that 
into and out of the state of New York, and you 
have no figures showing what that is. 


Mr. Paulding: I have no figures showing what 
390 that is. 


Cross Examination: 


Q. (By Mr. Hale.) I would like Mr. Porter to 
be just a little more definite in how he arrives at 
the estimate he has given as to what the effect, 
for example, of an order of the Interstate Com- 


81 


Paper 4 

merce Commission, put into effect now, based 
upon the figures he has given, would be annually 
or otherwise. A. That is on a 20 per cent basis? 
Of course, the figures which I have submitted are 
the passenger revenues, excess baggage, milk and 
cream on the basis of the tariffs as they now ex- 
ist or before the 20 per cent increase was granted 
by the Commission. Now, of course, by applying 
to that amount 20 per cent, which was the increase 
we would get under the Commission’s ruling, 
why, that would give us approximately twelve 
million dollars. 

Q. Now, you are assuming in that — I think Mr. 
Paulding was fair about that in his question and 
I want to be quite sure —you are assuming that 
the advanced rate for the intrastate service + 
domestic service — would not diminish the traffic? 
For instance, take the Pullman cars. You are 
assuming that the revenue would be increased, 
and are not assuming that people would use the 


391 


393 


Pullman and pay twice as much for it. <A. No, _ 


sir; not assuming that. These are the figures 


that were compiled for the year ending June 30th, 
1920. We have made no assumptions. 

Q. When you go into the future, is not the as- 
sumption, in order to raise this additional rev- 
enue—is not the assumption necessary that the 
number of people who use the Pullman will not 
be diminished? In other words, a man wil: pay 
twice as much for his Pullman and continue to 
do that? A. That might make some difference. 
I do not know as to that. 


Exam. LaRoe: I will ask Mr. Paulding to be 
careful to see that copies of these exhibits are 
21 


"395 


82 


6 Paper 4 
furnished to all persons whose appearances are 
entered here. 


Mr. Paulding: Every one who wants one. 


Mr. Adikes: Mr. Chairman, I wish to be entered 
as appearing for the Jamaica Board of Trade. 


397 Exam. LaRoe: What is the name? 


Mr. Adikes: John Adikes, Chairman Transit 
Committee of the Jamaica Board of Trade. 


CuarLtes L. Hunter was thereupon called 
as a witness, and having been duly sworn, 
398 testified as follows: 


Direct Examination: 


Q. (By ‘Mr. Paulding.) What is your occupa- 
tion? A. Assistant to Chairman, Trunk Line As- 
sociation, Passenger Department. 

Q. Have you been with the Trunk Line Asso- 

399 ciation for a length of time? A. Some thirty 
years. 

Q. What positions? A. I have occupied sub- 
stantially every position in that organization, 
from statistician, rate clerk, secretary and assist- 
ant to the Chairman. 

Q. Has your experience in that position been 
confined especially to passenger or freight, or has 

400 it included both? A. Substantially and almost 
exclusively to passenger traffic, sir. 

Q. Has that experience given you an oppor- 
tunity to become familiar with the passenger 
condition of the different states, as to rates and 
as to the physical conditions? A. It has, sir. 


83 


Paper 4 

(). And in the state of New York particularly? 
ay Y Bs, Sir. 

Q. Your office has been in New York most of 
these years? A. Entirely. 

Q. Are you familiar with General Order 28 of 
the Director General, Mr. Hunter? A. Yes, sir. 

Q. That was an order fixing passenger fares 
throughout the country, was it not? A. It was. 

Q. At what rate? A. On a basis of not less 
than three cents per mile. In other words, where 
any rates were less than three cents per mile they 
were advanced to that minimum. 

Q. Did that affect any rates within the state of 
New York? A. It did, sir. 

@. For instance, what rate? A. It had the ef- 
fect of increasing the intrastate rates in the state 
of New York which ranged from two to three 
cents per mile, to a minimum of three cents per 
mile. : 

@. Does that traffic rate continue? What is 
the present rate of fare for passengers within the 
state of New York? A. The present fare for pas- 
sengers interstate in the state of New York is 
3.6 cents per mile. 

Q. And intrastate? A. Three cents per mile. 

Q. How long has that interstate fare been in 
effect? A. Since August 26th, 1920. 

Q. Are you familiar with the status in the stat- 
ute of New York governing the issuance of mile- 
age books? A. Yes, sir. 

Q. What is that? A. It requires that a mile- 
age book be issued in denomination of five hun- 
dred or a thousand miles, good for bearer on the 
basis of two cents per mile. 


A401 


402 


403 


404 


405 


406 


407 


408 


409 


84: 


Paper 4 
Mr. Paulding: At this point I will ask to have 
read in evidence Section 57 of the Railroad Law 
of the state of New York and Section 60 of the 
law of the state of New York. 


Exam. LaRoe: Those sections are quoted in 
your petition. 


Mr. Paulding: They are quoted in my petition. 
I will furnish copies. 


(). (By Mr. Paulding) Has there been any ac- 
tion of any kind by the state of New York towards 
requiring the re-establishment of mileage books? 
A. Not as yet. Me 


Mr. Hale: I wrote a letter to Mr. Paulding. 
There are several things — for example, the mile- 
age book, the checking of baggage, such as bicy- 
cles and several other things, which rest exclu- 
sively on the state statute and I made the sug- 
gestion to him that I bring a summary proceeding 
under our statutes, making all operating rail- 
roads defendants, not on the ground that they 
were jointly interested in any act, but on the 
ground that they are all jointly interested in the 
principle involved and suggesting that we pro- 
ceed in a non-technical way and have the Court 
decide the question. 


Exam. La Roe: It would be in the nature of a 
proceeding to require the carriers to show cause. 
It would be a mandamus proceeding. 


Mr. Hale: It is called a summary proceeding, 
but it is mandamus really. Here is the Ulster & 
Delaware made an application to the Commission 


85 


Paper 4 
some years ago, on the theory that the Commis- 
sion had power to increase this two cents a mile 
under the mileage book law, and the Court held 
that the Public Service Commission had that 
power, and acting under it they raised that rate 
to 2.9 cents per mile. In other words, if they 
were going to charge 30 cents for the book, there 
would not be any object in issuing it. 


Exam. LaRoe: Then it is the intention of your 
Commission to see to it that the railroads are re- 
quired to conform to all of the provisions of the 
state statutes? 


Mr. Hale: It is our intention to take that case 
in the Court of the state of New York, with full 
knowledge, of course, that if the state goes 
wrong — 


Exam. LaRoe: I see. Proceed. 


Mr. Hale: Does the Examiner know what we 
have had in this state? The Federal judges de- 
cided that the state had authority over state mat- 
ters, and a state judge deciding that it did not. 


Exam. LaRoe: Proceed, please, Mr. Paulding. 


Q. (By Mr. Paulding.) Did Order 28 of the 
Director-General concern mileage books in any 
way, Mr. Hunter? A. Yes, sir; it did. 


411 


412 


413 


414 


Q. What happened as to that? <A. It directed 45 


that all fares should be brought, as I have said 
before, to a basis of three cents per mile, and 
mileage books were on sale at that time, generally 
on the basis anywhere from two cents to two and 
one-quarter cents a mile, and those books were 


22 


416 


417 


418 


419 


420 


86 


Paper 4 

continued to be honored on the basis of the full 
tariff rates, namely three cents per mile, and in 
1918 the Director-General decided that they 
should be withdrawn, and a so-called interchange- 
able script book sold in denominations of $15, $30 
and $90, at their face value, and be accepted for 
transportation on the basis of the full tariff fares, 
and since Federal control those book have been 
kept on sale. 

(). But the mileage book as such is not sold to- 
day? A. The mileage book as such is abolished in 
all parts of the country. There are none of them 
in effect or on sale whatever. 

(). As to these script books, what is the fare that 
is being taken when they are presented to-day? 
A. On interstate, 3.6 cents per mile, and on intra- 
state, in New York state, three cents per mile. 

Q. (By Exam. LaRoe) What are those seript 
books? A. Nothing more or less than the equiva- 
lent of money and they are accepted for transpor- 
tation fares, baggage and various other transpor- 
tation charges. In other words, more as a matter 
of convenience than really money value. In other 
words, their value they have to whoever buys 
them is the fact that they afford a facility to the 
frequent traveler. 

@. Do you have any objection to the continua- 
tion of these? A. No, sir. 


Exam. LaRoe: Are they involved in any way 
here in this proceeding? 


Mr. Paulding: Except as to the price, that is 
all. 


EKixam. LaRoe: As to the fare level? 


87 


Paper 4 
Mr. Paulding: As to the fare level, that is all. 


Q. (By Mr. Paulding) Your experience, of 
course, has made you familiar with the effect of 
the geographical situation the State of New York 
has on the passenger rate structure in the east? 
A. Yes, sir. 

Q. What is that effect? A. Well, the effect is 
that New York and Buffalo, being such important 
commercial centers that they practically are a 
fundamental key, you might say, to the entire 
rate fabrie of this country. You cannot disturb 
the rate between New York and Buffalo or Albany 
and Buffalo, for instance, in this particular in- 
stance and make it three cents a mile against 3.6 
cents a mile, without very seriously affecting the 
entire rate fabric of the country. 

Q. Will you enlarge that a little bit and show 
how and in what way, as a practical matter, that 
statement of yours works out? <A. Passengers 
ean take advantage of the lower intrastate fares 
of the New York Central from New York and 
other points to Buffalo, to secure through trans- 
portation at less than the interstate fares on com- 
binations, by buying tickets to Buffalo and repur- 
chasing therefrom, as ilustrated by the following 
examples: 

Through fare New York to Cleveland, which is 
interstate, $20.52. Combination New York to 
Buffalo, intrastate, $13.16, Buffalo to Cleveland, 
interstate, $6.56; total $19.72, or on repurchase a 
saving of 80 cents on every ticket. 

Q. And as to the surcharge on Pullman, is there 
a difference as to that? A. With respect to the 
surcharge on Pullman, not being collected in the 


421 


422 


423 


424 


425 


426 


427 


428 


429 


430 


88 


Paper 4 

State of New York, it means a passenger riding 
from New York to Buffalo in a sleeping car is 
enabled to save $1.25, which is the rate on which 
the surcharge is based, while other lines direct 
between New York and Buffalo, being intrastate, 
passengers would not be enabled to get through at 
less than paying the $1.25 surcharge. 


Q. (By Exam. LaRoe) Does that mean on the 
through passenger traffic from New York to 
Cleveland, the interstate fare would be defeated 
to the extent of $2.05 for a passenger traveling in 
a sleeping car? A. Yes. 


Q. (By Mr. Paulding) What are the roads run- 
ning between New York and Buffalo — the main 
railroads? A. The New York Central, as you 
have claimed, wholly in the State of New York. 
The other lines are the Delaware, Lackawanna & 
Western, the Erie, the Lehigh winllor a the 
West rite 


(. Are these interstate lines? A. All lines ex- 
cept the New York Central are interstate. 

Q. As to other points in the State of New 
York, is Syracuse an important commercial cen- 
ter? <A. Yes, it is. 

(). Is Rochester an important city? <A. It is 

Q. Is Ogdensburg a large city? A. It is, in the 
northern section of the State. 


Mr. Hale: I am glad to hear that evidence. 


Q. (By Exam. LaRoe.) Is there any evidence 
showing that as a fact what you fear is really hap- 
pening? That is to say, that passengers are stop- 
ping off and rebuying? A. Mr. Commissioner, 


89 


Paper 4 

we have some cases, but this arrangement as you 
can appreciate has only been in effect a very short 
time, since August 26th, and comes in the season 
when the Labor Day traffic was on, which was ex- 
ceedingly heavy, and we are not in a position at 
the moment to give any very concrete cases, but 
from our general knowledge and experience in the 
situation, we know that there are shoppers or bar- 
gain hunters in transportation, the same as there 
is in other lines of business, and particularly on 
the part of frequent travelers. For instance, 
those engaged in commercial pursuits, so that we 
feel more than confident that these advantages 
that are possessed by the New York Central Rail- 
road are going to be taken advantage of by 
passengers to a considerable extent. 

Q. I do not understand that you directly 
answered Mr. Paulding’s inquiry, which is one I 
am considerably interested in, and that is the ex- 
tent to which, if any, the lower rates between 
Buffalo and Albany will affect the through passen- 
ger rates between the east and the west. Will it, 
in your judgment, require a reduction in the inter- 
state fares below their present level, or will it 
merely facilitate the defeat of the interstate fares 
through repurchase? A. Well, Mr. Examiner, in 
that regard, in addition to the possible manipu- 
lation of the rates on the part of passengers, as I 
have said before, a situation of this kind is very 
serious, in that there are other arteries of travel 
that are affected by it. For example, between 
New York and Chicago, as I explained before, 
Buffalo is a very important gate-way. The New 
York Central operates via that gate-way. These 


23 


432 


434 


436 


437 


438 


439 


440 


90 


Paper 4 

opportunities for repurchase are there. Now, 
there are other lines operating via various other 
eate-ways, through Pittsburg, Salamanca, Wheel- 
ing, through Parkersburg, and the lines being on 
their own bottoms, under existing conditions, and 
competition being an element in the conduct of 
the properties, you can see that sooner or later 
there is going to be an agitation on the part of 
these lines which are adversely affected, to bring 
about some parity of conditions that exist under 
a normal basis of making interstate rates, thut is 
one of the things that is involved in this whole 
situation. 


Q. (By Mr. Paulding) Now Mr. Hunter, 
going to the New York-Buffalo situation, what is” 
the intrastate rate between New York and 
Buffalo? A. The intrastate rate between New 
York and Buffalo is $13.16 over the New York 
Central. 


(). And take the other lines between New York 
and Buffalo, what is the rate under present inter- 
state rates over those lines? A. $14.27. 

(). All of those rates being larger? A. They are. 

Q. Assume, if you will, that the New York State 
rates continue in effect, three cents a mile, what 
will be the ultimate effect on the other rates be- 
tween New York and Buffalo? A. Well, judging 
by past experience, I should say that they might 
net endure for any great length of time. 

. Would they have to meet the New York 

State rate? A. They would, sir. - 

(). Decrease interstate rates to that extent? A. 
I think it would, inevitably. 


th 


Paper 4 

Q. Prior to Federal control and of General 
Order 28, what was the basis of the rates inter- 
state between New York and Chicago? A. The 
rate was on the basis of two and one-half cents per 
mile and no combinations over any intermediate 
points that reduced it. 

Q. Did the rate between Buffalo and Albany 
have any effect on the through rate at that time? 
A. No, sir. 

(J). Assume that the three-cent rate from New 
York to Albany were continued in effect and the 
two-cent rate were in effect between Albany and 
Buffalo, would that asi an intrastate combination 
affect the interstate rate between New York and 
Buffalo? A. Yes, sir; it would reduce the rate 
from $13.16 to $10.21 combination. I might say 
for the record, being on the basis of three cents 
a mile New York and Albany and two cents a mile 
between Albany and Buffalo. 

(). If a mileage book were required to be sold 
in the State of New York at two cents a mile, 
would that affect in any way the through rate 
intrastate between New York and Buffalo and the 
through rate interstate between New York and 
Buffalo? <A. It would have the effect of establish- 
ing a rate between New York and Buffalo of $8.78, 
and taking New York to Chicago, for illustrative 
purposes the through rate interstate is $32.67, 
while the combination of the New York-Buftalo 
2-cent mileage book, $8.78, the Buffalo-Chicago 
interstate fare of $18.81 would establish a through 
rate of $27.59, or a difference of $5.08 per ticket. 

Q. Now, answering me from your experience in 
the passenger business in all these years you have 


441 


443 


444 


445 


446 


44 


coe | 


448 


449 


92 


Paper 4 
been in it, would that or would it not be the in- 
evitable effect of the sale of mileage books, or the 
continuance of the three cent fare in the State of 
New York? <A. Beyond question. 


Q. (By Exam. LaRoe) Is it possible to police 
your passenger traffic in such a way as to prevent 
abuse of the interstate fare? In other words, is 
there any practical way to prevent a man who 
wants to repurchase a ticket at Buffalo from doing 
so? A. I should say, as a practical matter, Mr. 
Examiner, only get a very small proportion of 
such cases, for the reason that most of the service 
at Buffalo is broken. Itis a point where a change 
of motive power is made and passengers have 
opportunity, if they are so disposed, to Jump into 
the station and get a ticket from Buffalo to their 
interstate destination. Similarly, reversing it, 
you have the same situation to New York. 

®. If the basis of $13.16 continues from New 
York to Buffalo via your line, whereas the basis 
of $14.20 is continued between the same points 
via the other routes, is that difference, in your 
judgment, enough to divert a substantial amount 
of passenger traffic from the interstate routes to 
the intrastate route? A. I would answer that by | 
stating that under normal condition of rates, the 
greater proportion of the traffic between New 
York and Buffalo moves intrastate over the New 
York Central Railroad, and by having a lower 
rate, logically the traffic would very materially 
increase over that line. 


Q. (By Mr. Paulding) Do you know of your 
own experience in the last few weeks what has 


93 


Paper 4 
happened in that regard, Mr. Hunter, as to 
whether the traffic has decreased upon the inter- 
state lines or increased on the intrastate lines 
between those points? A. I simply know what 
the traffic officials have told me, that the business 
is being diverted to the other lines. 


Q. (By Exam. LaRoe) Are you able to say 
whether the interstate railroads have taken that 
matter up with the New York Central and com- 
plained aboutitinany way? A. Yes, sir; they have 
complained about it, but in view of this proceed- 
ing and the matter being, you might say, in abey- 
ance, awaiting the outcome of it, why, they are 
simply suffering the situation. 


Q. (By Mr. Paulding) In other words, the 
interstate rate is being charged by the interstate 
railroads, and the intrastate rate by the intra- 
state road? A. Yes, sir. 


Mr. Hale: I suppose your efforts are somewhat 
altruistic, therefore. 


Mr. Paulding: No; I would not say that, Judge 
Hale. It goes further than the mere matter of 
rates. The matter of equipment and the matter 
of service is involved. 


Mr. Hale: You are not appearing here selfishly 
for the New York Central. 

Mr. Paulding: If I were appearing only for 
the New York Central, I would still complain of 


that rate and that situation. The situation as to 
the New York Central is a very serious one. 


24. 


451 


452 


453 


454 


455 


456 


457 


458 


459 


460 


94. 


Paper 4 

Q. (By Mr. Paulding) Take the New York Cen- 
tral — take the two points now, Mr. Hunter, be- 
tween New York and Buffalo, the stations upon 
the line of the New York Central, the intrastate 
road, and the stations upon the lines of the inter- 
state roads, as to the other roads which you have 
mentioned, do the conditions which you have men- 
tioned as to rates apply only to Buffalo and New 
York, or do they apply to all the stations in that 
territory? A. They apply to every common point 
in the State of New York, Utica, Syracuse, 
Rochester, Buffalo, Ogdensburg, Plattsburg. I 
say practically every point where the New York 
Central is a factor, and then I should say prac- 
tically the entire State. 

Q. Do those conditions or do not those condi- 
tions affect stations other than the stations which 
you have mentioned in the state of New York? 
A. They do, yes, sir. 

(J. Will you say in what way they do? A. Well, 
they have the effect of establishing lower rates 
over the New York Central than via the lines do- 
ing the interstate business. 

(). And as a practical matter, does that make 
any difference to a man going, say, from Ithaca, 
which is not on the main line, to Chicago? In 
what way would that happen? A. Well, he would 
in all probability take advantage of the lower rate 
to Buffalo and repurchase. 

(). Prior to Federal control, following the ques- 
tion asked by Mr. LaRoe a few moments ago, do 
you know the experience that was had on the ex- 
tra fare trains between New York and Chicago, 
as to the practice of passengers beating the extra 


95 


Paper 4 

fare? What did they do and was it a practical 
matter? A. They charge an excess fare on cer- 
tain trains operating between Chicago and New 
York, but no excess fare was charged between Chi- 
cago and Albany, so some passengers —in fact, 
it grew to quite a practice, would buy a ticket to 
Albany and then buy their ticket from Albany to 
New York, and in that way tried to evade the ex- 
cess fare. The conductors had instructions under 
those conditions that if they could determine if 
the passenger was a through passenger, which 
they were able to do in a good many cases, why, 
he charged him the excess fare, notwithstanding 
he was trying to evade it. 


Q. (By Exam. LaRoe.) There was no extra fare 
from Chicago to Albany? <A. No, sir. 


Q. (By Mr. Paulding.) Was that a well known 
common practice? <A. Yes. 


Q. Practiced by many people? A. Yes, sir. 

Q. And something that could not be overcome? 
A. It could not. 

Q. In spite of the efforts of the railroad com- 
pany to do it? A. Mr. Paulding, in connection 
with that question of manipulation, it was very 
evident in connection with the central states, 
when they had two cents a mile there, so much so 


461 


462 


463 


that the Interstate Commerce commission called AGS 


upon these carriers to devise ways and means for 
getting the interstate rates, and they had circu- 
lars issued to their conductors and agents. They 
even had to break the lines at the state borders in 
order to prevent it. 


466 


467 


468 


469 


470 


96 


Paper 4 
.Q. Did that have any effect as a practical mat- 


_ter? Of course, efforts were made, but did it 


amount to anything? A. I understand in a very 
small number of cases were they able to protect 
themselves and get the interstate revenue. I 
might also present another case here, which is 
particularly interesting: Taking the line of the 
New York Central and the West Shore, operat- 
ing on opposite sides of the Hudson river between 
New York and Albany, with a substantially like 
distance, the fare of the New York Central, $4.27, 
was not advanced as against the increased fare 
of $5.13 over the West Shore Railroad, which is 
interstate, while the fares in the past had been 
the same by both lines. 

Q. The West Shore Railroad —do you know 
what control that is under? A. Controlled by the 
New York Central, under lease. 

(J). And operated by them? A. And operated 
by them. ! 

Q. Does the West Shore go all the way to Buf- 
falo? A. It does —practically parallels the New 
York Central for the entire distance. 

(). Now, these conditions as to the main p)ints 
which you have mentioned occur practically at 
every station in the state of New York? A. I 
should say at every station. 

(). That is if the three cents fare is continued in 
New York that it is not only probable, but possi- 
ble that the interstate fare is defeated by practi- 
cally every passenger who goes in or out of the 
state of New York? A. Yes, sir, I think that is 
going to be the inevitable effect. 

(). Will you say what the through fares are be- 
tween a few of the principal points in the eastern 


97 


Paper 4 

country, taking some of these instances which 
you have given to me, from points within the 
state of New York to points without, Buffalo to 
Chicago, Buffalo to Boston, etc.? A. Well, the 
through fare, Albany to Chicago, today, is $29.48; 
combination Albany to Buffalo intrastate, $8.89 ; 
Buffalo to Chicago $18.81, $27.70; a difference of 
$1.78. 

To Boston — Buffalo to Boston, using the same 
combination, we have a rate interstate of $17.90; 
and combination, $16.12, or a difference of $1.78. 
Now, that is true of every rate on the Albany- 
Buffalo line, no matter where you are going, east 
or west, all the way to the Pacific Coast. In fact, 
around the world. 

Q. In other words, the Albany—Buffalo rate is 
the key to the eastern rate situation? A. Albany-— 
Buffalo is the key to the New England situatior: 
and the New York—Buffalo is the key to the bal- 
ance of the country. 

@. And if the rates remain as they are inter- 
state will that inevitably affect the intrastate rate 
as a matter of competition? <A. Yes. 

Q. Will it bring it down or leave it alone? A. 
Bring it down. 

Q. To the level of the state rate? A. To the 
level, at least, of the combination and to the state 
rate, I should say. 

Q. I interrupted you. Goon. A. We will take 
from Philadelphia to Albany. The interstate rate 
is $8.37; on a combination over New York, $7.51; 
a difference of 85 cents. That means everything 
south of New York is 85 cents, as far as Albany 
is concerned. Albany to Montreal $9.04; com- 


29 


AT) 


AT2 


473 | 


474. 


475 


; 


476 


477 


478 


479 


480 


98 


Paper 4 
bination $7.89; difference $1.15. The Delaware & 
Hudson tell me that that rate is being manipu- 
lated very considerably. In other words, passen- 
gers are buying to Rouses Point and repurchas- 
ing. 

Q. Take the Ontario & Western Railroad, run- 
ning into New York, interstate to Cornwall and 
intrastate from Cornwall to the west side of the 
river? A. Take New York to Oswego, the On- 
tario & Western rate is $11.75, whereas the com- 
bination over Cornwall makes it $10.11, a differ- 
ence of $1.64. 

Q. Do you or not know whether the Ontario & 
Western is to-day selling any through tickets 
between Oswego & New York? <A. We are ad- 
vised they are practically selling no through 
tickets, but passengers are taking advantage of 
this Cornwall combination. 


@. (By Exam. LaRoe) Is there a break in the 
service of Cornwall, or does the passenger have 
to leave the train? A. I understand they buy 
their tickets to Cornwall and pay their fare on 
the train. All trains stop at Cornwall. 


Mr. Andrus: Passengers have ample time to 
get tickets leaving the Ontario & Western. I de- 
sire to state that is being done largely by local 
passengers—not only confined to through pas- 
sengers, but local passengers from Cornwall 
north are to a considerable extent availing them- 
selves of that situation. 


The Witness: You see, Mr. Examiner, as the 
distance increases the spread becomes wider, and 
the example I gave you on Oswego was a long 
distance point. 


oY 


Paper 4 

Q. (By Mr. Paulding) Have you any knowledge 
as to whether the Long Island is to-day selling 
any interstate tickets? A. I understand substan- 
tially none at all. In other words, passengers 
are buying to New York and repurchasing. 

(). So the condition is a practicable and not a 
theoretical one? A. A very serious one. 


Cross-Hxamination: 


Q. (By Mr. Clark) May I ask you whether the 
Long Island ever did sell any interstate tickets 
in any amount? A. The Long Island, as you are 
aware, covers a very large section of this state, 
and they do a very considerable interstate busi- 
ness. Relatively, they do as large a business :.s 
other lines similarly situated. 

Q. Do you know how much they took in in in- 
terstate tickets in any year? A. No. 

@. Do you know whether they took in a con- 
siderable amount? A. I do not know, but I un- 
derstood Mr. Porter — 


Mr. Paulding: During the year 1919 it was over 
one million dollars interstate passenger business. 


The Witness: That is on the record here. I 
understood Mr. Porter to say about one million 
dollars. 


481 


482 


483. 


484 


Q. (By Mr. Clark) Have they ever done that Ags 


before? Do you know? Have you got the fig- 
ures before 1919? 


. Exam. LaRoe: I would like to have the record 
show for the last two or three years exactly what 
the Long Island interstate traffic amounted to. 


Mr. Paulding: That will be done. 


486 


487 


488 


439 


490 


100 


Paper 4 
Re-direct examination: 


(J. (By Mr. Paulding) In the matter of commu- 
tation tickets, have you anything to say as to 
that? A. With respect to commutation fares 
which were also advanced twenty per cent inter- 
state under the authority of the Commission, 
similar conditions exist as in connection with one 
way passenger fares, with the result that taking 
for illustrative purposes in New York, New Jer- 
sey, Connecticut suburban districts, commuters 
living in New York State are traveling at the old 
fares, while the commuters residing in New Jer- 
sey and Connecticut are paying the increased 
commutation fares, the former being intrastate, 
while the latter are interstate, and all of these 
commuters are doing business in the city of New 
York. Mr. Examiner, further touching upon the 
commutation situation, as also in connection with 
the one way passenger fares, where illustration 
was given as between the New York Central and 
the West Shore Railroad between New York and 
Albany, there are in effect commutation fares as 
far north as Poughkeepsie on both lines, which 
prior to August 26, 1920, between common points 
connected by ferries, were the same, and the tick- 
ets were honored optionally on either road, but in 
view of the increase not having been approved 
by the Public Service Commission, it results in 
the situation under which the commutation fares 
of the New York Central Railroad remain un- 
changed, while the West Shore Railroad fares on 
account of being interstate have been advanced, 
and if the interchangeable arrangement is con- 
tinued, passengers will naturally buy New York 


101 


Paper 4 491 
Central commutation tickets in order to obtain 
advantages of the lower fares, which in turn has 
the effect of defeating the fares of the West 
Shore Railroad. 


Q. (By Examiner LaRoe) What is the ter- 
ritorial region involved there? A. New York isa 


terminal, 492 


(). Where does this commutation traffic come 
from? <A. Well, it comes from the outlying dis- 
tricts here, New Jersey, Connecticut and New 
York. Now, the New York Central and the West 
Shore are parallel with the Hudson river here 
and they have a commutation fabric rate that 
extends as far north as Poughkeepsie. Now, on 
either side of the river there are important sta- 
tions, and the commutation rates from these sta- 
tions to New York are the same, and in the past 
the tickets over either road have been good. 

Q. Well, Poughkeepsie is not on both sides of 
the river, is it? A. No, but I said connected by A904 
ferry. 

Q. And the commuter could go from Pough- 
keepsie to New York by crossing the river to the 
West Shore by ferry and then coming down on 
the west side of the river? A. Yes, optionally, 
or the West Shore passenger could cross the river 
and come down on the New York Central. 

Q. What would be the object of the Poughkeep- 495 
sie passenger in crossing the river and coming 
down on the West Shore? A. On account of more 
accommodating train service at times, and vice 
versa — gives the maximum service at the same 
rate. Now, manifestly if the West Shore rates 


26 


493 


496 


497 


498 


AGG 


102 


Paper 4 
are increased 20 per cent, and this point that is 
optional, Poughkeepsie—the optional arrange- 
ment is continued —the passengers will buy New 
York Central tickets. 


Q. (By Mr. Paulding) Is there a, situation 
where any roads running in or out of the city 
and state, has commutation rates, both interstate 
and intrastate on the same train? A. Yes, sir; a 
similar condition also exists as to commutation 
fares on the New York, New Haven & Hartford 
Railroad, as outlined in connection with one way 
passenger fares, in that a commuter, traveling on 
the New Haven trains to Portchester, N. Y., and 
located in the same seat with another commuter 
from New York to Greenwich, Conn., the next 
station beyond, the passenger to Portchester is 
traveling on a commutation ticket on the basis of 
the old fare, while the other passenger to Green- 
wich is paying the 20 per cent increase. | 


(). (By Exam. LaRoe) What is the difference in 
amount? Do you have the figures? How much 
would that amount to on a monthly ticket? A. 
The Portchester fare is $10.89 and the Green- 
wich, Conn., fare $13.47. 


Q. By Mr. Paulding) And the distance between 
the two? A. Only 2.4 miles distance. 


(). And that applies as far east as New Haven, 
does it not? <A. Yes, sir; the suburban zone of 
the New Haven line extends as far east as New 
Haven. 

Q. Now, as to the surcharge upon Pullman 
space, will you state what the effect of that is as 


103 


Paper 4 
to passengers in the state of New York and pas- 
sengers interstate? A. The Interstate Commerce 
Commission authorized a surcharge for space 
occupied by passengers traveling in parlor and 
sleeping cars on the basis of 50 per cent of the 
Pullman rate, but the Public Service Commission 
did not approve it and hence taking the New 
York-Buffalo situation for illustrative purposes, 
a passenger occupying a lower berth in a sleeping 
car over the New York Central Railroad, does 


o01 


502 


not pay the surcharge of $1.25, while such sur- 


charge collection is made from passengers travel- 
ing over the other lines between the same points, 
and which has the effect of further widening the 
disparity between the cost of the trip where a 
sleeping car is used by the other lines operating 
between the same points. There are through pas- 
sengers destined to or from points west of Buf- 
falo, as for example, Chicago, who only purchase 
their sleeping car accommodations as far as But- 
falo, on account of the surcharge not being made 
there. The New York Central Railroad in New 
York state, it extends no equal conditions under 
which passengers may journey that way at less 
cost than passengers traveling in sleeping cars 
‘over the other lines operating between New York 
and Chicago. I have figured the entire situation 
here, taking the difference in the passenger fare 
surcharge and war tax, and I find that between 
New York and Buffalo the total for the New York 
Central is $16.91, and for all the other lines 
$19.46; or, in other words, taking into account the 
difference in the lower rate of the New York 
Central and the addition of the surcharge a pas- 


503 


504 


104 


6 Paper 4 

‘Senger is enabled to travel from New York to 
Buffalo in a lower berth in a sleeping car for 
$2.55 less than by all the other lines operating 
between those points, and the same comparison 
on Chicago, assuming that the passenger travels 
west of Buffalo in a coach. In other words, only 

_._ in a sleeping car between New York and Buffalo, 

SON G91 15 

Q. Now, going back for a moment, Mr. Hunter, 
to the competitive situation in New York with 
these different railroads, how many roads reach 
Syracuse, for instance, from the city of New 
York? <A. There are three lines, New York Cen- 
tral, West Shore and Delaware, Lackawanna & 

508 Western. 

. Two interstate and one intrastate? A. The 
intrastate and the two latter interstate. 

(). And Rochester? A. There are four lines, 
one of which, the New York Central, is intra- 
state, while the other three lines, the West Shore, 
the Erie and Lehigh Valley are interstate. 

509 =. At Ogdensburgh there is a similar situation, 
iis there not? A. Yes; I think I have Ogdensburg 
here. The same situation — similar situation. 


Q. (By Exam. LaRoe) Do the Lehigh Valley 
and Lackawanna have a heavy passenger traffic 
from New York to Buffalo? A. Yes, sir. 


510 Q. The Lehigh Valley runs the Black Diamond 
Kixpress? A. Yes. 

Q. And a number of other special trains? <A. 

Well, they have accommodating service between 

New York and Buffalo. Of course, they do not 

operate anything like the service of the New 


105 


Paper 4 

York Central. The Lackawanna has trains be- 
tween New York and Buffalo. 

Q. How about the Erie? A. The Erie as well. 

(). Reverting to this subject of commutation 
fares, there is a very heavy commutation traffic 
into the city of New York from almost all direc- 
tions? A. Yes. 

Q. That comes, part of it from New Jersey, 


part from Long Island, part from Connecticut, 


part from New York. A. Yes, sir. 

(). Has the 20 per cent been applied already to 
all commutation business to New York except that 
originating in the state of New York? A. Yes, 
sir, effective August 26, 1920. 

(). Approximately what percentage, just as a 
rough estimate, of the total commutation business 
into New York has had the 20 per cent imposed 
upon it? That would include, of course, Con- 
necticut and New Jersey? <A. I haven’t those 
figures, Mr. Examiner, but will be very glad to 
supply them for the record. 

Q. Well, New Jersey commutation traffic into 
New York is very heavy, is it not? A. Very, yes, 
sir. 


Mr. Clark: I think the Long Island is the 
heaviest. 


Mr. Taylor: Mr. Examiner, I would like to eall 
your attention to one point. That is there are 
some points in New York state from which the 
commutation traffic to New York is through the 
state of New Jersey. Some of them are quite sub- 
stantial as commutation points, and yet they are 
so located as to be adjacent to stations which have 


27 


511 


512 


513 


514 


515 


516 


517 


518 


519 


520 


106 


Paper 4 
the intrastate commutation service to New York 
City. For example, Nyack on the Northern Rail- 
road of New Jersey, operated by the Erie, is con- 
nected by ferry with Tarrytown on the New York 
Central, and the service from Nyack is largely 
suburban service, while the Erie to New York 
is interstate. The service from Tarrytown to 
New York over the New York Central is intra- 
state. There are other places similarly situated. 


The Witness: It is very true of the West Shore 
Railroad. They have a very heavy suburban 
commuting business. 


Exam. LaRoe: Is there any way the Nyack 
passengers can defeat the interstate fare? 


Mr. Taylor: They can cross by ferry to Tarry- 
town, landing near the New York Central station 
in Tarrytown. 


Exam. LaRoe: Do you know whether that is 
done or not? 


-Mr. Taylor: Ido not know. It has hardly been 
in effect long enough. 


Q. (By Mr. Paulding) Following those ques- 
tions as to commutation tickets, Mr. Hunter, can 
you state from your experience as to whether 
there is competition between the stations in the 
commuting zones in New York, Connecticut and 
New Jersey, the localities endeavoring to obtain 
more business or more inhabitants by reason of 
railroad rates? A. Yes, sir. 


Q. What have you to say as to that? A. Well, 
I will say with respect to commutation business, 


107 


Paper 4 
there is competition to the extent that those re- 
siding in one locality are interested to the extent 
that they want to have rates that are reasonably 
fair to them as in contrast with persons living in 
other localities, similarly situated. 

(). I want to know whether or not the fact that 
lower competitive rates are given to one locality 
in one part of the country and another locality in 
another part, both going to a common point for 
business has any effect on making people live i» 
one place or the other? A. I think that that would 
naturally have a very considerable effect. For in- 
stance, a passenger who lives in New Jersey to- 
day and formerly had a commutation rate of $10, 
is now paying $12, whereas the commuter who is 
more fortunately situated and living in the state 
of New York is still paying $10. Now, that neces- 
sarily has an influence on other persons who are 
thinking of going out of the city to live and locat- 
ing where the rate is the cheapest. I should say 
_to that extent there is real competition on com- 
mutation traffic as between localities. 

Q. It is only incidental, but the question of war 
tax means a great deal, does it not, in these 
matters? <A. Yes, sir; the United States Govern- 
ment is an interested party in that relation. 


Mr. Hale: Any more than to get all they can? 


Mr. Paulding: That is a good deal for the 
Government now-a-days. 

Mr. Hale: The higher the rate, the higher the 
taxes. ! 


The Witness: That is what we are working for. 


521 


52? 


524. 


525 


at 


108 


Paper 4 
Mr. Paulding: I think that is all I have to ask. 


Mr. Hale: I want to ask just one or two funda- 
mental questions. 


Mr. Griffin: I would like to ask the witness a 
couple of questions. 


Hixam. LaRoe: Yes. 


Re-cross examination: 


Q. (By Mr. Hale) This loss of interstate busi- 
ness by a passenger buying a ticket to Buffalo 
when a train is broken is largely speculative, is 
it not? <A. Yes, it is largely speculative, but with 
our general knowledge of the ways among pas- 
sengers who are experienced we know beyond 
peradventure of a doubt that as this thing be- 
comes more pronounced, a large number of pas- 
sengers will naturally take advantage of it; par- 
ticularly those engaged in commercial pursuits 
and that travel constantly, and here again comes 
the situation which railroads do not like to be 
placed in, nor would we think that the state au- 
thorities would want to have the passenger who 
knows the ways and means of getting the advan- 
tage by the combination process, be in a more 
favorable position than his neighbor who knows 
not of it. 

Q. Well, then, it follows that you are able to 
estimate what percentage of the interstate busi- 
ness passing through Buffalo in all directions 
will take advantage of the opportunity to get off 
the train and buy'a state rate ticket? A. I can- 
not say that for the reason that the new interstate 
fares — 


109 


Paper 4 

Q. Are you able to say it or not — what the per- 
centage will be? A. Absolutely not. 

(). Are you able to estimate the percentage will 
be around 5 per cent of interstate passengers who 
do this? A. I am not prepared to state any per- 
centage. 

@. Would you place it as high as 95 per cent? 
A. I would not. 

Q. Would you place it as low as 1 per cent? 
A. I would not. 

Q. The bulk of the interstate passenger 
business to Buffalo will be by Pullman sleeper, 
chair car, club car, etc. A. Are you speaking 
with respect to New York, now? 

Q. Well, would you say that into the State of 
New York through Buffalo, will the bulk of inter- 
state business be by special car of some kind? A. 
It all depends on the length of the haul, I should 
say. 

Q. Taking all of the business together, will the 
bulk of the business be by Pullman? A. I should 
say long haul business, a large proportion of it 
will be by Pullman, but I should say the greater 
proportion of it would be in coaches. I think all 
of the through travel would be in Pullman service 
—that is'a great proportion of it. It all depends, 
as I say, upon the length of the haul, which would 
determine as to the kind of equipment that the 
passenger would travel in. 

Q. It follows it would be more difficult for a 
Pullman passenger who has got his ticket through 
to accommodate himself by stopping off and buy- 
ing another ticket, does it not? A. Well, there is 
a certain amount of inconvenience about it, per- 


28 


631 


532 


533 


035 


110 


536 Paper 4 
haps, but then the fellow who wants to save the 
money will suffer that inconvenience. 

. Well, the Pullman and railroad conductors 
together can check that pretty well? A. They can 
endeavor to check it, but I think that they will 
fail in a great many cases. 

Q. But to a large extent they can check it? A. 
We hope that they can. 

Q. The difficulty would probably be mostly on 
short hauls into this state on coach traffic, is that 
so? A. There would be a very large traffic. 

Q. But of course the loss in revenue on short 
hauls would be much less, naturally, than it would 
be on the long Pullman hauls? A. Then you are 
speaking of the relation of the density of the 
traffic conditions. 

(). Well, that is apparent of course on the face 
of it. The man coming through from Chicago to 
New York who splits his ticket at Buffalo, the 
loss in revenue to the railroad is much greater 
than it would if he was going a few miles beyond 
539 Buffalo from a few miles outside the state? A. 

Yes, but on the other hand the traffic between the 
shorter points might be more dense and in the 
ageregate it might exceed the through. 

(). But you know, of course, that there is really 
no commuting from outside of the state of New 
York through Buffalo to points beyond Buffalo 

549 that amounts to anything? A. What do you mean 
by commuting? 3 

Q. Well, people who come in daily to their work. 
A. Well, in the Buffalo district, of course, thie 
commutation traffic is comparatively small when 
compared with New York. 


| 


53 


538 


a ah 


Paper 4 
(). If there is any commutation traffic it is into 
the city of Buffalo and not to any points beyond 
there? A. Yes. 


By Mr. Griffin: 


Q. Buffalo and Albany are ports, Buffalo on 
Lake Erie and Albany on the Hudson river, abort 
330 miles apart? A. Well, from a passenger 
standpoint we regard Buffalo as a port in con- 
nection with any business we might have over the 
lakes. 

Q. Well, Albany is a port, in that you may con- 
nect with day boats and night boats running be- 
tween Albany and — A. Yes, sir; we have freight 
rates that way. 

(). And the two cent fare for way passengers to 
and from the ports of Buffalo and Albany on the 
New York Central Railroad, is an advantage that 
the people of this state have long enjoyed, is it 
not? A. I think they have, yes, sir. 

@. And if the two cent state rate is raised to 
the level of the interstate rate that advantage 
will be destroyed, will it not? A. Well, it will not 
exist any more. If I may comment on that — 

Q. I would rather you would not. A. All right. 


By Mr. Hale: 


Q. Mr. Hunter, I would like just two or three 
things that I think are fundamental, but I would 
like to have the record show. How many com- 
petitive routes between New York and Chicago 
for passenger traffic? A. How many? 

Q. Yes. A. Do you want me to enumerate the 
- lines? 


541 


542 


543 


545 


112 


546 Paper 4 
Q. I would lke to have you. A. All right, the 
New York Central, West Shore, New York, On- 
tario & Western, Erie, Delaware, Lackawanna & 
Western, Lehigh Valley, Pennsylvania, Balti- 
more & Ohio — eight lines. 
Q. Now, the New York Central, goes up north 
as faras Albany, then west to Buffalo and around 
547 Take Erie by the Lake Shore and Michigan Cen- 
tral, and the most southern route is the Balti 
more & Ohio? A. Yes. 

Q. Does that go through Washington? A. Yes. 

(). The Pennsylvania is the short line of all? 
A. Yes, sir. 

(). And the through rate of all of these rail- 
roads is found by multiplying the mileage of the 
Pennsylvania by 3.6? A. Substantially so, Judge, 
but I would like to get this clear upon the record 
just how the rate is made to-day. 

Q. Very well. A. The short line from New 
York to Chicago is via the Pennsylvania Rail- 
road, distance 906 and a fraction miles. It makes 
549 three cents a mile, as established by the Railroad 

Administration $27.22. To that, under the au- 
thority of the Interstate Commerce Commission 
in Ex Parte 74, 20 per cent was added, so that 
that has the effect of establishing the present in- 
terstate rate between New York and Chicago of 
$32.67. 
seq Q. Well, that really if you divide $32.67 by the 
number of miles you get the quotient of 3.6? A. 
Substantially I should say. I have not tried it. 
Q. Well, that is the basis. A. That is the basis. 
Q. If there is any difference, it is one of frac- 
tional and not of consequential moment? A. Yes. 


548 


113 


Paper 4 

(). That makes the rate, therefore, 3.6, less than 
that on every competing line? A. Yes, sir. 

Q. Which is the longest road, Baltimore & Ohio 
or New York Central? A. I could not say off- 
hand. The New York Central is not the longest 
line. I should imagine perhaps the Baltimore & 
Ohio. 

Q. Have you any idea what the Baltimore & 
Ohio gets per mile on that same rate? A. No, I 
have not precisely, but we could figure it out. 

Q. It is a question of computation, is it not? A. 
A question of computation, yes, sir. 

Q. In other words, there is only one carrier be- 
tween here and Chicago that is going to receive 
net 3.6 per mile? A. Yes. 

@. And yet you propose to make —I say you 
propose —-I assume you identify yourself with 
the New York Central and these other petitioners 
here. You propose to make every local passenger 
in the State of New York pay a greater rate for 
his ride from one point to another than you re- 
ceive on the through route or any of these others’ 
except the Pennsylvania? In other words, that 
the rate fixed by the Pennsylvania by reason of 
eompetitive conditions, between New York and 
Chicago is to determine every local rate in the 
State of New York, and determine it at a higher 
figure than between New York and Chicago? A. 
Well, Judge, of course, I could not subscribe to 
that proposition. 

Q. You think I am arguing the case. <A. Be- 
cause it 1s competitive. 

Q. Is not that the fact, beneath it all, that only 
one earrier — that the whole business is deter- 


29 


551 


502 


503 


554: 


555 


114 


Paper 4 


“mined by competitive conditions, so far as the 


New York-Chicago rates are concerned; that you 
eannot allow any one road to charge or make the 
others charge the same rates precisely; if they did, 
one road would get all the traffic — is that the idea 
— the short road? A. Well, the Railroad Adminis- 
tration, I might say, prior to Federal control, the 


2 yates between New York and Chicago were not 


alike by all lines. They were alike by the New 
York Central and the Pennsylvania, and the other 
lines were known as differential lines and a like 
rate obtained. Ths Railroad Administration de- 
cided that the rate should be alike by all lines. 


_ In other words, that the basic rate of three cents 


(es 


qn 
cm 
em 


oGC 


‘per mile should be the establishing factor in 


making the rate. They, therefore, established 
like rates on all lines between New York and 
Chicago, made on the short mileage on the Penn- 
sylvania. Now, in approaching the equalization 
of fares, the long prevailing custom and practice 
that had been in effect throughout the country 


' was taken into consideration. In other words, 


the fares between New York and Chicago, being 
ereat commercial centers, it was felt that they 
should be alike in order to accommodate the enor- 
mous travel between those two points, by giving 
the passengers the maximum train facilities be- 
tween those two points; and that was true of a 
ereat many other commercial centers, like be- 
tween New York and Pittsburg, New York and 
Washington, and New York and St. Louis. 
Entirely aside from the competitive conditions, 
as you are trying to represent as between the car- 
riers themselves, my own view is that while the 


115 


Paper 4 

carriers were naturally concerned as between 
themselves, from a competitive standpoint, it 1s 
not one-sided, in that the traveling public were 
benefited to the extent that the carriers have not 
taken the full advantage of the 3.6 cents per mile, 
so that the passengers on the long haul got the 
advantage of the common rates and with the maxi- 
mum train service. 

q. I understand you are making here for a rate 
of 3.6 cents per mile on all local tickets between 
any two points, between stations on the New 
York Central, including Albany and Buffalo? <A. 
Yes, sir. 

Q. The real foundation for your asking for 
that is the fact that the rate from Chicago to New 
York is determined by the mileage of the Penn- 
sylvania? A. No, sir, absolutely not. 

@. Why should the rate between Schenectady 
and Utiea, for illustration, or Utica and Syra- 
euse, or any other two stations ten miles apart, 
depend remotely on a fare which must be fixed 
by competitive conditions existmg between Chi- 
eago and New York, by reason of these various 
routes? A. Judge, we are not attempting to rest 
our ease on the New York-Chicago situation. As 
I understand it, we are simply trying to explain 
the facts in the case — what the result would be 
if the rate fabric in the State of New York stands 
where it is today. - 

(). I suppose there are no two-roads to Buffalo 
— that is the Lehigh, the Lackawanna, the Erie 
and the New York Central all have different 
mileages? A. Yes. 

Q. That rate is determined by the road with 


561 


562 


563 


564 


565 


116 


Paper 4 
the least mileage? A. The Lackawanna Railroad. 

@. So you take a passenger who rides over 

your road from Albany to Buffalo — you take a 
less rate per mile than the Lackawanna receives? 
A. That is true, but again I say, if there is any dis- 
advantage in that, it is against the carrier and 
not the public. 
567 (). There is no, exception in your prayer for 
relief, or what you desire to accomplish by this 
proceeding or any similar proceeding —no ex- 
ception in favor of local fares at any less than 
3.67 A. No, sir. 

Q. Without any regard to what local conditions 
may be? <A. No, we think, Judge, that the rate 
fabric of the country, both intrastate and inter- 
state ought to be on a uniform basis, in order to 
eliminate all discriminations as between persons 
and localities. You cannot do it otherwise. There 
is no reason in the world why the people of the 
State of New York should be in a preferred class 
against those who live in the State of Pennsyl- 
969 vania. 

(). Is there any reason why people who want 
to travel locally between short distance points 
should pay a higher rate for their passage than a 
road like the New York Central or the Baltimore 
& Ohio is going to get out of this rate structure, 
because confegsedly they are going to get less 

570 than 3.6 cents per mile? A. I don’t follow you, 
Judge, on that line of argument. 


Q. (By Mr. Paulding) Mr. Hunter, what Judge 
Hale has asked you concerning the Chicago rate, 
made over Pittsburg and adopted by the lines 
having a longer mileage than the Pennsylvania, 


566 


56 


00 


117 


Paper 4 571 
illustrates what you have said as to the necessity 
of roads having a right, if you please, to charge 
a higher rate of fare, being compelled to meet this 
through rate of the road having a lower rate of 
fare. Is that not a fact? A. That 1s a fact. 


Q. If the intrastate rate governs the low rate 
of fare made by that road, the other roads must 
reduce their fixed rate to meet that condition, is 
that not a fact? A. Yes, sir. 


@. (By Mr. Clark) There is not any case on 
the Long Island Railroad where the Long Island 
Railroad train goes out of the State of New York, 
is there? A. No, I do not ‘so understand there is. 


Q. You don’t understand that there is? A. No, 
sir. 

Q. And there isn’t any other railroad that runs 
a train—a passenger train — to a station on the 
Long Island, from outside the State of New York? 
A. No, sir. 

@. Do you know whether the New York Cen- 574 
tral Railroad sells tickets or publishes tariffs of 
fare to points on Long Island? A. What line? 

@. The New York Central. A. They do. 

(). And all the other interstate roads? <A. Yes, 
sir. 

Q. To what stations do they sell those tickets, 
do you know — all stations on Long Island? A. 575 
They carry in their tariff the principal points, and 
they will sell a ticket to any point not carried or 
from any point. 

(. And the Long Island sells to any point on 
any other railroad, you understand? A. Yes, sir. 

Q. Are you familiar with the Long Island 

30 


572 


573 


576 


ov7 


578 


579 


580 


118 


Paper 4 
traffic? Have you ever lived in Long Island? A. 
No, I have not lived there, but I have been to Long 
Island several times. 

Q@. Have you made a study of it to some extent? 
A. No —in what respect? 

Q@. Well, do you think there is a general move- 
ment from any point in Long Island to any point 
without the State of New York? Is there a line 
of travel from any point on Long Island to any 
point outside the State of New York? A. Well, 
I cannot speak definitely upon that point, but I 
know that there are a great many residents on 
Long Island, and I have to assume that they 
travel the same as people living in other parts of 
the country, and relatively to the number living 
there, I should imagine they would travel sub- 
stantially the same as those living in other sec- 
tions, on interstate journeys. 

(). As a matter of fact, Long Island 1s merely 
a residential section of the state, is it not? A. 
Residential? 

@. Yes. A. I should say it is residential, just 
the same as New York City. 

Q. No large cities on Long Island with the 
exception of Brooklyn — is that not so? A. There 
is no other city on Long Island that will compare 


‘with it, I should say. 


Q. Weil, no city on Long Island except Brook- 
lyn that would compare with Buffalo or Albany? 
AGING: | 

Q. Or any of the other cities which you have 
been talking about? A. None of these larger 
cities, no. 

©. Now, do I understand you, it is the purpose 


119 


of this application to increase all single and 
round-trip tickets to 3.6 cents per mile? A. No, 
sir; the proposition here is to increase the fares 
that were in effect prior to August 26, 1920, 20 
per cent. We are simply stating this comparison 
between 3 and 3.6 for illustrative purposes. The 
application is to increase the fares as they existed 
on August 26, 1920, 20 per cent. 

Q. You know, do you not, that the Pennsylvania 
Railroad, the New York, New Haven & Hartford 
and the New York, Westchester & Boston all have 
local rates considerably under 3 cents per mile? 
A. The 20 per cent would apply to these rates. 
It was not the intention to put them on a 3 cents 
per mile basis. 

Q. If they were left at that rate, which would 
still leave them below 2 cents a mile, it would be 
a penalization against Long Island points which 
had 3 cents, would it not? A. In connection with 
comparisons, insidious and otherwise that may be 
drawn, and between rates in different sections, I 
would like to get into your mind the thought that 
the Interstate Commerce Commission, in granting 
this advance generally to the carriers, because of 
conditions with which you are entirely familar, 
stated that manifestly they could not go into all 
of the then existing relationships as between 
fares, either freight or passenger fares, but if 
there were any situation where it might be 
thought that attention should be given to the con- 
sideration of them upon merit, those cases might 
be presented later and so considered; so that in 
this matter we are not coming here and asking 
or seeking out any particular rates or kind of 
rates or fares, as to whether they may be com- 


581 


582 


583 


585 


120 


6 _ Paper 4 
paratively one with the other. In other words, 
this is a revenue producing measure. It does not 
run, as I understand it, to the question of maxi- 
mum rates or minimum rates or anything else. 

Q. Regardless of the justice of the present 
rates, you want the 20 per cent increase? A. Yes, 
that is the idea. I do not understand that ques- 
tion is in issue at all. At least that has been my 
understanding. 

Q. Have you any record of what was the 
amount of money paid into your road for inter 
state tickets to points on Long Island in the last 
three years, or any other railroad? A. You under- 
stand I don’t represent any particular railroad. 
I am connected with an association, and I think 
Mr. Paulding will be very glad to furnish you any 
statistics you want. 

(). Could they be secured? 

Mr. Paulding: I think so, Mr. Clark. 

Mr. Gardner: I understood that was to be 
secured. 

Q. (By Mr. Clark) The first question was 
raised as to tickets sold on the Long Island. I 
‘want to find out how many tickets were sold on 


other roads to points on the Long Island. A. That 
is, you want the information in both directions? 


589 


590 . Yes; unless it will be conceded that it is 
practically negligible. 


@. (By Mr. Victory) Do you know whether or 
not a passenger can buy a ticket at the New York 
Central office, say at Albany and ride through 
to Jamaica, in the County of Queens? A. He 
could, yes. 


121 


Paper 4 591 
(J). Over the Long Island Railroad? A. Yes; 


and have his baggage checked through, too. 

Q. Could he buy a passenger ticket? A. Yes, 
absolutely. 

Q. When did that practice go into effect? A. 
That practice has been in effect for a great many 
years, has it not, Mr. Woodward? 592 


Mr. Woodward: It has been in effect ten years, 
anyhow. 


Q. (By Mr. Victory) And you can buy at Ja- 
maica, Long Island, a through ticket to Albany? 
A. Any place in the country. 


Q. That is in practice to-day? A. Yes, sir. 593 


(). (By Mr. Paulding) Of any other place in the 
United States? A. I might say for your informa- 
tion that the Long Island Railroad has on file 
with the Interstate Commerce Commission the 
‘basing and interstate basing tariff which they 
use in selling tickets from points on their line to 
any point in the United States. 


Q. (By Mr. Clark.) Is there any way that we 
could form an opinion on the amount of tickets 
sold on other roads to points on the Long Island? 
A. We could call upon the lines to furnish that 
information. 


594 


Exam. LaRoe: I am afraid that would be dif- 595 
ficult to get in the eastbound direction. 


The Witness: I do not mean all the railroads 
in the country. 


Q. (By Mr. Victory.) May I ask if the agent 
that sells that ticket is not the agent of the Long 
ol 


122 


596 | Paper 4 
Island Railroad Company or is not the agent of 
the New York Central? A. He is the agent of 
the Long Island railroad, selling a ticket from 
Jamaica to a point on the Baltimore and Ohio, 
or wherever the passenger desires to travel. He 
sells what is known as an inter-line ticket, read- 

597 ing from a point on the Long Island railroad to 
the other lines. | 


Mr. Bikle: Mr. Examiner, is not the informa- 
tion you requested a little while ago substantially 
what these gentlemen are asking? That is the 
passenger revenues of the Long Island, derived 
from the interstate traffic, so that would cover it 

598 both ways and that is readily available? 


Kixam. LaRoe: Please show in the same con- 
nection what the total passenger revenue of the 
Long Island is, so we can have a basis of com- 
parison. 


Q. (By Mr. Victory.) There is no line compet- 
599 ing with the Long Island railroad on Long Is- 
land? A. No. 


Q. (By Exam. LaRoe.) That is not strictly 
true, is it? I thought there were several subways 
that were in competition with the Long Island 
railroad. A. Steam roads, say for instance, be- 
yond Jamaica up to Jamaica, there are surface 

600 lines and elevated lines that operate to within the 
city of New York. 


@. You said something about the history of 
fares and I am interested in that phase of the 
matter. Was there a time within the last ten or 
fifteen years when there was a general two cents 


123 


Paper 4 
per mile basis of passenger fares in this terri- 
tory? How far back did the two-cent basis ap- 
ply? A. There has not been any two-cent rate. 

Q. Then it was 214 cents, was it? <A. It was 
21% cents; in the early days is was three cents a 
mile, but there was some agitation in some of 
the states for a two-cent rate. For instance, in 
this State. The bill was vetoed by Governor 
Hughes and left to the determination of the rea- 
sonableness of the rates in the hands of the Pub- 
lie Service Commission. Then there was an at- 
tempt in the State of Pennsylvania to put in ef- 
fect a two-cent law and it was declared unconsti- 
tutional by the Supreme Court of that State, and 
rates have been established generally in this 
eastern territory, interstate of 214 cents a mile. 
The only exception to that was I think on the New 
York Central between Albany and Buffalo. 

Q. Approximately, when did the 214 cent basis 
take effect? A. I think it was in 1916, was it not? 

Q. You say prior to that, the basis was higher 
than 21% cents. A. Yes. 

@. And generally on a three-cent level? A. 
Yes. 

Q. What was the territorial extent of that 
three-cent fare that was in existence prior to 
1916? A. Well, it covered, you might say, the 
Trunk Line territory. 

(). Did it cover Central Freight Association 
territory, also? A. Personally, I think it was 
pretty well on a three-cent basis until the states 
came along and established the rates on two 
cents a mile, but the interstate bases were gen- 
erally on 214 cents a mile. 


601 


602 


603 


604 


605 


124 


606 Paper 4 
Q. Is it fair to say that prior to 1916, the fares 


both State and interstate in Trunk fine and New 
England were on a basis of three cents a mile? 
A. Within the State? : 
Q. Both State and interstate rates. Get that 
straight, now. Prior to 1916, as I understood 
go7 Your answer, the State and interstate fares in 
New York, Vermont and New Jersey, as well as 
Pennsylvania — most, if not all of New England 
and Trunk Line territory —were on the basis of 
three cents a mile; is that correct? A. Well, 
generally, they were on a three cents a mile basis, 
but there were exceptions. For instance, any 
between Albany and Buffalo, the rate was two 
608 cents a mile— had been in effect for years. The 
rate between New York and Buffalo was made 
over Albany; that established a lower rate than 
three cents a mile, whereas the rate from New 
York to Washington and Philadelphia was take 
cents. 
Q. In 1916 the 21/,-cent basis became effective 
609 on interstate traffic? A. And also largely in the 
states, except where as in the central states, the 
statute fixed the maximum of two-cent fare laws. 
(). Is it a correct statement to say that in 1916 
a basis of 214 cents became effective on passenger 
tariffs, except where provided by State statute? 
A. Yes, sir. 
610 . There are no important interstate excep- 
tions to that basis that you know of? A. No, sir. 
Q. And that applies to all of the eastern terri- 
tory, including trunk line and New England? A. 
Yes, sir; I am going to confirm that particular 
year, Mr. Examiner. 


125 


Paper 4 611 


Q. Yes, I wish you would. Now, that 214-cent 
basis established in 1916, continued in effect until 
General Order 28 of the Director-General of 
Railroads? <A. Yes, sir. 

-Q. When the fare became three cents? <A. Yes, 
sir. 

Q. And that applied, both State and interstate, 612 
throughout all the territory we have been talk- 
_ ing about, regardless of State laws? A. Yes, sir. 

Q. And that continued in effect until August 
26th of this year? A. Yes, sir. : 

(). What is the prevailing fare level in the 
states surrounding New York? <A. Well, in all of 
New England, Pennsylvania, New Jersey, Dela- 613 
ware, Maryland and Virginia, 3 cents a mile. 

Q. That is, they are now 3.6 cents?) A. I mean 
3.6 cents on the interstate basis. 

(). That is to say both State and interstate in 
those states, the basis is now 3.6 cents? A. Yes, 
sir. 

Q. Is that true also of Ohio? A. No, sir. 614 

Q. What is the basis in Ohio? A. It is still 3 
cents a mile. 

Q. By virtue of State laws? A. Yes. 

Q. The situation in Ohio then is similar to what 
it is in New York? A. Yes, sir, and in Illinois 
too, you covered this morning. 

Q. How long have the New York State rates — 
intrastate rates been on the same general basis 
as the interstate rates, with the exception of that 
haul between Albany and Buffalo? A. Substan- 
tially always as I understand it, prior to June 
10, 1918. 

- Q. Can you say that confidently for the period 


32 | 


615 


126 


61 Paper 4 
with which you have been connected with the as- 
sociation? A. Yes, sir. 


Exam. LaRoe: Mr. Paulding, I wonder if you 
could furnish for the record a copy of the order 
of the New York Public Service Commission 
with regard to freight rates. I have never seen 

617 it. 


Mr. Hale: I have them here, Mr. Examiner, 
and thought I would offer them. I will offer them 
now. 


| Exam. LaRoe: Thank you very much. 


Mr. Hale: I think they constitute all of the 

gig Orders that the Commission has made, but if I 

find to the contrary I will inform you. There 

are proof sheets of two opinions that were not 
printed when I left. 


Exam. LaRoe: Now, this No. 526, relates to 
what, the freight or passenger? 


Mr. Hale: I cannot tell by number. There are 


ne two special orders here. 


Exam. LaRoe: Mr. Reporter, will you mark as 
Exhibit No. 3, the opinion headed No. 526, and as 
No. 4 the one marked No. 527; as No. 5, the one 
marked, ‘‘ Special Commission Order No. 7363 ’’; 
No. 6, the opinion dated August 24, 1920; No. 7, 

g29 the one dated August 19th; No. 8, the one entitled 
‘¢ Granting Special Permission, No. 7363,’’ dated 
August 26th. 


(The papers referred to were thereupon re- 
ceived in evidence, marked, ‘‘ Complainant’s Ex- 
hibits Nos. 3, 4, 5, 6, 7, and 8, Witness Hunter,’’ 
and are forwarded herewith.) 


127 


Paper 4 
Mr. Hale: In that connection, I would like to 
make this inquiry; I suppose you would like any 
statute that we have, but we do not need to offer 
it in evidence? 


Hixam. LaRoe: It won’t be necessary, but I 
would like to have it in convenient form. 


Mr. Hale: I would like to have you take under 
your consideration our law, section 57 of the Rail- 
road Law, and I will furnish you with our entire 
railroad law here, and I want to say in connec- 
tion with that, what Mr. Paulding will not dispute 
me in saying, and, therefore, equivalent to testi- 
mony, I hope, that that rate of two cents a mile 
for local way passengers, all points between AI- 
bany and Buffalo, inclusive, has never been more 
than two cents a mile in the history of the State, 
being originally fixed in the act which author- 
ized the consolidation of six or seven short rail- 
roads into one railroad, to be then and thereafter 
known as the New York Central, and that was 
chapter 76 of the Laws of 1853, which has been 
continued and carried into the general railroad 
act, and now a part of the Railroad Law, and 
these are the vital particulars so far as it now 
20eS. 

‘This chapter shall not be construed to allow 
any rate of fare for way passengers greater than 
2 cents per mile to be charged or taken over the 
track or tracks of the railroad known as the New 
York Central Railroad Company.’’ 

Now, of course, that does not mean the New 
York Central Railroad, as it exists today, but it 
does mean what was then the New York Central 
Railroad between Albany and Buffalo. 


621 


622 


623 


128 


626 Paper 4 
Exam. LaRoe: What does the expression 
‘‘ way passengers ’’ mean in there? 


Mr. Hale: I assume that anyone who gets on 
at Albany, for example, and goes to Buffalo, or 
any station east of Buffalo like Schenectady or 
Rochester. 


627 
Exam. LaRoe: Suppose he gets on at Syra- 


cuse to go to Troy, is he a way passenger then? 


Mr. Hale: He is, because Troy is part of the 
New York Central Railroad as originally consoli- 
dated. 


Exam. LaRoe: Suppose he gets on at Troy to 


a go to Poughkeepsie? 


Mr. Hale: No, he is not a passenger on the 
New York Central. He is on another line. The 
New York Central is as meant by that term in this 
statute —it has two eastern termini, one at Troy 
and one at Albany. They converge at Schenec- 
629 tady. They separate again at Syracuse, one going 
by the old road as it is called, and one by direct 
line to Rochester, and then they go on, one to 
Niagara Falls and one goes to Buffalo. 


Kixam. LaRoe: Mr. Paulding, will you have a 
witness to testify as to transportation conditions, 


630 or have you not contemplated that? 
Mr. Paulding: No, I have not, but I can very 


easily furnish one. I have all sorts of experts 
here. 


Hixam. LaRoe: I think we had better have the 
Railroad Law of New York marked Exhibit No. 
9. | na 


129 


Paper 4 
(The paper was thereupon received in evi- 
dence, marked, ‘‘ Complainant’s Exhibit No. 9, 
Witness Hunter,’’ and is forwarded herewith.) 
Mr. Hale: In that connection, would you like 
the Public Service Commissions Law? 


Exam. LaRoe: Yes; we will mark that Exhibit 
No. 10. 


(The paper thereupon received in evidence, 
marked, ‘‘ Complainant’s Exhibit No. 10, Witness 
Hunter,’’ and is forwarded herewith.) 


Mr. Holmes: Before you adjourn, Mr. Exam- 
iner, I would like to enter an appearance, Hugh 
A. Holmes, representing the American Manufac- 
turers’ Association. 


Exam. La Roe: We will take a recess until 2:15 
o’clock. 


(Whereupon, at 12:30 p. m., a recess was taken 
until 2:15 o’clock p. m.) 


AFTER RECESS — 2:15 pe. M. 
Exam. LaRoe: Will you proceed, Mr. Pauld- 
ing? 
Mr. Paulding: I will call Mr. Vosburgh. 

: L. F. Vossurcu was thereupon called as a 
witness, and having been duly sworn, testi- 
fied as elgues 

} Direct-examination : 


Q. (By Mr. Paulding). What is your position? 
A. Traffic manager of the New York Central Rail- 
road. | 

oo 


631 


632 


633 


634 


635 


636 


637 


638 


639 


640 


130 


Paper 4 

(). How long have you been connected with the 
New York Central Railroad? A. About 28 years. 

@. What capacities? A. Starting in as a ticket 
seller, and acting in the capacity of city passenger 
agent, general western passenger agent, general 
eastern passenger agent, assistant general pas- 
senger agent, general passenger agent and passen- 
ger traffic manager. 

@. As general eastern passenger agent, you 
were located in New York city, were you not? A. 
Yes. 

(J. And as general passenger agent, you had 
charge of all passenger traffic over the New York 
Central? <A. Yes. 

Q. And located in the city of New York? A. 
Yes, sir. | 

Q. With or without particular knowledge of the 
traffic conditions in the State of New York on the 
passenger side? <A. I did not get that. 

@. Did you have particular knowledge as to 
passenger conditions in the State of New York? 
A. Yes, sir. 

. Some testimony was given this morning as 
to the different roads running out of New York 
to common points in the’State of New York, intra- 
state and interstate lines. Are you familiar with 
the traffic conditions upon each of those roads? 
A. In a general way, yes, sir. 

Q. What was it that made it necessary for you 
to be familiar? A. Principally because there was 
keen competition between the lines. 

(). Between what points? A. Well, between New 
York and Buffalo, New York and Rochester, Syra- 
cuse, Utica and points west. 


131 


Paper 4 

Q. That is, competition existed all of the time? 
A. Yes, sir. 

Q. Does it exist today? A. Yes, sir. 

Q. Well, now, is that competition in service, or 
as to rates or as to what, Mr. Vosburgh? A. Both 
service and rates. 

Q. Is or is not the service rendered by the differ- 
ent roads between the different common points or 
between New York and points in the State of New 
York, a similar service or is it otherwise? A. 
(Juite similar. 

Q. Will you say in what respects it is similar? 
A. As to approximate running time, character of 
equipment, dining car service. 

(). And as to number of trains? A. Yes; there 
is, speaking directly of the service, between New 
York and Buffalo—there are more trains via 
the New York Central than via the other lines. 
A very large percentage of the business, how- 
ever, is done on night trains, and the service both 
as to the character of equipment and running time 
is approximately the same. 

Q. Now, take the service over the New York 
Central Railroad between New York and Buffalo 
and other intrastate points, and New York and 
Chicago, Cleveland and other interstate points, 
will you say in what respect the service is similar 
or different, as to service between intrastate 
points and interstate points? A. There is no dif- 
ference in the character of the service between 
intrastate or the interstate points. 

(). As to equipment or as to time? A. No ma- 
terial difference, generally speaking. Of course, 
in the case of the service between New York and 
Chicago, we have the Twentieth Century Limited. 


641 


642 


643 


644 


645 


646 


648 


649 


650 


132 


Paper 4 

Q. But that is a particular Chicago train? <A. 
That is a particular Chicago train. 

@. But as to other trains, outside of the Cen- 
tury, passengers are taken upon those trains, ir- 
respective of whether they are interstate or in- 
trastate passengers, are they not? A. Yes, sir. 

(). And persons going from New York to Cleve- 
land will travel upon the same train, with persons 
going from New York to Buffalo, especially upon 
a night train, is that not a fact? <A. Yes. 

Q. Does that hold good as to the through rides 
out of New York? A. Yes, sir. 

@. Several questions were asked this morning 
as to the history of the passenger rates in the 
State of New York. Are you familiar with the 
history of those rates? A. Yes, sir. 

Q. You had personally to do with most of it, did 
you not? A. So far as our line is concerned, yes. 

(). Won’t you give in your own words what the 
history of that was, going back to say fifteen 


years ago? A. Well, as the record shows by the 
‘testimony this morning, the basis of fare between 


Albany and Buffalo for way-passengers, by rea- 
son of the State statute, has been two cents a © 
mile, or was two cents a mile for a number of 
years prior to June 10, 1918. The fare between 
Albany and New York was likewise two cents a 
mile for a number of years prior to about 1910, 
when those fares were advanced to a basis of 2.17 
cents per mile. The fares on other parts of the 
line, the northern New York territory, described 
as the Rome, Watertown and Ogdensburg dis- 
trict, and the Adirondack divisions, and what 


133 


Paper 4 

might be described as the Pennsylvania division, 
were the basis of three cents a mile until about 
1907, when they were reduced to two and one-half 
cents per mile. Those fares were in effect under 
the order of the Director-General, effective in 
June, 1918, when they were made three cents a 
mile uniformly. 

(). What particular traffic reasons caused the re- 
duction in those fares? A. So far as our line is 
concerned, I think a very important governing 
influence was the fact that under the New York 
State statute we were required to sell a 500 or a 
1,000-mile ticket at 2 cents per mile, good for 
bearer and unlimited, and we found that in the 
territory where our normal fares were very much 
in excess of this mileage fare, that a very large 
percentage of our local business was handled by 
the use of these mileage tickets, and I think that 
was one of the compelling influences for reducing 
the fare at that time. 

Q. You are familiar, are you not, with the situa: 
tion in New York, as to the rate situation in the 
eastern district? A. Yes, sir. 

(). Just say in your own words what the influ- 
ence of New York, if any, is upon the rate situa- 
tion generally? A. You mean New York State? 

Q. New York State, yes. A. Because of the im- 
portance of the cities of New York and Buffalo, 
and the service that operates via the Buffalo gate- 
way, the fares in New York State have a very con- 
trolling influence on fares generally, as was out- 
lined in some detail by Mr. Hunter this morning. 

Q. Do you know whether since the 26th of Au- 
oust, this year, there has been any difference in 


o4 


651 


502 


653 


655 


656 


657 


658 


659 


660 


134 


Paper 4 
the traffic between Buffalo, or between New York 
and Buffalo and Buffalo and New York, as to the 
different railroads? <A. Yes, sir. 

Q. What is that difference? A. I know that 
there has been considerable falling off in the traf- 
fic, heretofore handled by the lines other than the 
New York Central, and it is my opinion that if 
this difference in fares should continue, with a 
difference of $2.55 in favor of the New York Cen- 
tral for a passenger in a sleeping car between New 
York and Buffalo, it will have the effect of divert- 
ing practically all of the business of the other 
lines to the New York Central. 

Q. Or is there an alternative to that as to its 
effect upon the through rate? <A. Yes; the al- 
ternative would be for the other lines to reduce 
their fare to the basis of the intrastate fare. 

Q. Is the falling off in traffic attributable to the 
fact that the service on the other lines has de- 
teriorated in any way, either as to time or char- 
acter of service? A. Not at all, sir. There has 
been no change. 


Mr. Paulding: I think that is all. 
Cross-examination: 


Q. (By Mr. Hale): Mr. Vosburgh, take the fare 
via the Lackawanna to Utica. What determines 
how much that shall be? A. I think that fare 


‘today is figured on actual mileage basis. 


Q. Of what road? A. Of the various lines. For 
instance, the fare via the Lackawanna, is figured 
via the mileage of the Lackawanna. 

(). Are there different rates between New York 
and Utica? A. Yes, sir. 


135 


Paper 4 

Q. And each road is collecting 3.6 cents that has 
the right to collect it? A. Yes, sir. 

Q@. The New York Central is collecting 3 cents? 
A. Yes, sir; there are a number of those condi- 
tions, Judge, that were created during Federal 
control, that you can realize could not continue 
permanently under competitive conditions. 

@. You had in mind, of course, your own policy. 
What will be the condition of things, provided 
this increase should be made, provided, for ex- 
ample, that the New York Central should be re- 
quired — privileged or required, as the case may 
be, to charge 3.6 cents? A. Then the State of New 
York will gain. 

(). Within the State of New York for its local 
traffic? A. In what regard do you mean? 

Q. On the total fare, New York to Utica. 
Wouldn’t you have to charge more than the Lack- 
awanna? <A. No, sir; I should say the fare would 
be common. 

@. And that would be determined by the road 
that had the shortest mileage? A. Yes, sir. 

(). Which has the shortest mileage, the Lacka- 
wanna? A. No; I think the New York Central. 

(). You think your distance is less than the Lack- 
awanna? <A. I think so. 

Q. So that the Lackawanna would have to take 
less than 3.6 cents? <A. Yes, sir. 

Q. Now, that would be the same at Syracuse? 
A. Precisely. 

@. And Rochester and Buffalo? A. Yes, sir. 

Q. So that only one railroad competing for 
Utica traffic, or Syracuse, or Rochester, or Buffalo 
traffic between New York and those points, would 


661 


662 


663 


666 


667 


668 


669 


670 


136 


| Paper 4 
really receive 3.6 cents; the rest would be receiv- 
ing a little less? A. Yes, that is true. 

(). Now, why should not the local traffic which 
hasn’t anything to do with New York or Buffalo, 
or anything to do with Syracuse, Utica or Roch- 
ester as competing points—why should that be 
made on the basis of competitive rates? A. As 
was covered by Mr. Hunter—I thought he an- 
swered that question this morning — we are au- 
thorized by the Interstate Commerce Commission 
to advance our fares 20 per cent, and as he pointed 
out we did not single out any particular situation. 
We purpose carrying out that authority and ap- 
plying that basis throughout the country. 

Q. Now, the examiner asked you about the his- 
tory of these rates. I will ask you just one ques- 
tion in that connection. Has there been any statu- 
tory change respecting railroad rates, by the State 
of New York — local rates — in the last ten years, 
say, except the enactment of the Public Service 
Commissions Law itself in 1907; but apart from 
that, has not the statute been amended which 
fixes a rate, like the rate between Albany and 
Buffalo, or the rate generally of 3 cents a mile, 
which included the Erie, Lackawanna, etc.? A. 
I don’t know as I am competent to answer that, 
but it is my impression, not. 

Q. I think there has not been. I think that might 
be conceded on the record, so far as fixing a spe- 
cific rates, there has been no change of the stat- 
ute, but of course, the Public Service Commis- 
sions Law has come on, under which the Public 
Service Commission has the power, upon showing, 
to either raise or lower. (No response.) 


137 


Paper 4 
Mr. Paulding: Do you think the Ulster and 
Delaware case goes to that full extent? 


Mr. Hale: I think it does, if you construe it 
along with what they hold in the other utilities. 


Tixam. LaRoe: I take it your Commission has 
never passed upon the general passenger-fare 
level? 


Mr. Hale: Perhaps I ought to let Mr. Pauld- 
ing, who is more familiar with it, state in regard 
to an application to raise the rates of the New 
York Central between Albany and Buffalo to 214 
cents, some years ago. 


Mr. Paulding: A general application was made, 
between four and five years ago, by the New York 
Central Railroad, in connection with the other 
railroads in the State, to increase passenger 
rates. It was-made, of course, by filing the tariffs, 
showing the increased rates throughout the State, 
raising them to the general level of 3 cents a mile. 
The Public Service Commission suspended those 
tariffs, and after a very extended and exhaustive 
investigation into the matter, denied the applica- 
tion and continued the suspension. A long opin- 
ion was written by the Commission, the chief rea- 
son for it being that the statutory rate of 2 cents 
per mile for way passengers between Buffalo and 
Albany, while it was a discriminatory rate against 
the rest of the State, prevented them from grant- 
ing a general increase in passenger rates, and, 
therefore, they were compelled to deny the whole 
‘Increase. 


30 


671 


672 


673 


674 


675 


138 


Paper 4 
Exam. LaRoe: Was that a state-wide applica- 
tion? , 


676 


Mr. Paulding: That was a state-wide applica- 
tion. 


Exam. LaRoe: What was the date of that ap. 
677 plication? 


Mr. Paulding: I think that was 1916 — the early 
part. 


Mr. Hale: Of course, that record will speak for 
itself, and the opinion of the court and the order 
made. I will furnish that if you would lke it. 


678 Exam. LaRoe: I think that is sufficiently im- 
portant to be filed in the record, at least as a 
matter of history. 


Mr. Hale: I never have understood that on that 
application the Commission held that they had 
not the power on an application made to increase 

g79 the 2-cent rate for local passengers between AI- 
bany and Buffalo —that they had not the power 
to do it, but simply that that action was necessary 
in view of the legislation of the State. I will be 
olad to furnish the order and the opinion. Now, 
the record —TI do not suppose you would want 
your record lumbered with it. 


680 Exam. LaRoe: No, I think not, just the opin- 
ion, if you please. 

Mr. Hale: I will do that. 

Q. (By Exam. LaRoe) Your testimony with 
regard to the extent of the 214 cents fare, when 
it was in effect, seems to differ slightly from that 
of the witness this morning. A. Yes, I think so. 


139 


Paper 4 

(). It was not the state-wide fare. As I under- 
stood the witness this morning, he said that that 
fare was pretty general in this state, except for 
the portion of the line between Buffalo and 
Albany. That does not conform with your under- 
standing. A. That is generally so, yes. As I 
stated, the fare between Albany and Buffalo was 
on the basis of 2 cents. 

(). Where else in the state was not the 214 
- cents fare applied? A. Between Albany and New 
York. 

Q. It did not apply there? A. No, where the 
basis was 2.17. 

Q. Yes; you mentioned that. Now, where else? 
A. That is all, so far as our line is concerned. 

Q. How about other lines? A. I think the basis 
generally was 21% cents. 

(). The date should be changed then from 1916 
to 1907? A. Yes, sir. 

Q. Then the 214 cent fare was in effect from 
1907 to 1918? A. That is correct. 

Q. Did that apply also to states surrounding 
the state of New York? A. I think so, yes. 


Mr. Hunter: Mr. Examiner, I kept saying 1916 
this morning, but I really meant 1906. Since 
luncheon I confirmed it. It took effect on Nov- 
ember 1, 1906. 


The Witness: Well, I have not checked the 
date, but I knew it was either late in 1906 or 1907. 


Q. (By Exam. LaRoe) Your line has the 
heaviest passenger service, | assume, of any line 
in the State of New York? A. Yes, sir. 


681 


682 


683 


684 


685 


686 


687 


688 


689 


690 


140 


Paper 4 

@. And your line between New York and 
Buffalo is the heaviest density line in the state? 
A. Yes, sir. 

Q. You said something about different fares to 
Utica. Do I understand that at the present time 
there are three or four different fares from New 
York to Utica? _A. I think so. 

Q. To what extent is that situation general? 
A. Well, I should say that it is true more or less, 
but not general. In establishing the new fares, 
the Director General authorized different fares 
via different lines between given points, based in 
some instances on mileage and other conditions. 


Mr. Paulding: If I might say there, I have 
figures here which show that is true as to Utica 
and Syracuse — between New York and Utica 
and New York and Syracuse, only. 


Exam. LaRoe: That is a rather unusual situa- 
tion, and one is naturally prompted to inquire 
why it was not corrected when Federal control 
terminated. 


Q. You have in mind correcting it? A. Oh, yes. 

(). It is just a temporary proposition? A. Ca 
tainly. 

(). Now, with regard to the transportation con- 
ditions; take the line of the New York Central, 
extending into the State of New York from the 
west, through Buffalo. Are the transportation 
conditions within the State of New York differ- 
ent from those in the territory west thereof? A. 
West of the State of New York? 

Q. Yes; in other words, what I am trying to get 
at is this, whether or not there is a difference in 


141 


Paper 4 691 
transportation conditions within the State of New 
York, which may possibly justify a lower level 
of rates within the State of New York? A. I 
should say not, sir. 

Q. Are you familiar with the transportation 
conditions generally in the territory west of the 
State of New York? A. Yes, sir. 692 

Q. And in your judgment the transportation 
conditions are sufficiently similar to justify the 
same level of fares in that territory as in the State 
of New York? A. Yes, sir. 

(). Are you familiar with the transportation con- 
ditions in New Jersey, and in Massachusetts and 
Connecticut? A. Yes, sir. 

(J). Are the transportation conditions generally 
in those states, substantially the same as those 
within the State of New York? A. I should say 
particularly in New England, because of the den- 
sity of traffic. 

Q. That is to say the density of traffic in New 
England is relatively quite heavy? A. Yes, sir. g94 

(). Especially southern New England? <A. Yes, 
sir. 

Q. Take the line of the Lehigh Valley, or the 
Lackawanna, both of which I believe enter the 
State of New York from the south? A. Yes, sir. 

Q. Are the transportation conditions on those 
lines within the State of New York more favor- | 
able than they are within the State of New Jer- oe 
sey and the State of Pennsylvania? A. I should 
say not, sir. 

Q. Is it your judgment that the transportation 
conditions are such that the rate of fare should 
be the same? A. I think so. 


36 


693 


142 


696 : Paper 4 

(). Do you know of any instance where the trans- 
portation conditions of any interstate railroad 
entering New York, are more favorable with re- 
gard to its intrastate traffic than they are with 
regard to interstate traffic? A. I should say none. 

(. Well, then, to sum up your various answers, 
they seem to come down to this: That there are 
no transportation conditions within the State of 
New York—and when I say transportation con- 
ditions, of course, I mean geographic conditions 
and traffic conditions, everything bearing on the 
cost of the service —I take it that your answers 
might be construed to mean that the transporta- 
tion conditions in the State of New York as a 
whole, are not more favorable than they are for 
the various interstate hauls into and out of the 
State of New York via the lines of these rail- 
roads? A. That is correct. 


697 


698 


Exam. LaRoe: Do you have any further ques- 
tions? 


Q. (By Mr. Hale) In that connection, Mr. Vos- 
burgh, don’t you think running upon a water- 
level absolutely to Albany, then running on a 
water-level from there to Buffalo, make condi- 
tions more favorable for the New York Central 
than for the Lackawanna? <A. That is one feature, 
yes. | 
700 


699 


Q. But that is not sufficient to qualify your an- 
swer, you think? A. The conditions, so far as 
that is concerned, are no different, for instance, in 
New England than they are in New York State. 

(). I had in mind particularly the competition 
between here and Buffalo. Would not a diagram 


143 


Paper 4 701 
of the elevations the Lackawanna has to over- 


come be very much greater than the New York 
Central? <A. Yes. 3 

Q. Would not that be true of the Erie and the 
Lehigh? <A. Yes. 

(J. And is not the density of traffic along your 
line, including the Hudson Valley cities of Al- 702 
bany, Schenectady, Utica and so on to Buffalo — 
would not that give you a density of traffic that is 
lacking on all of these other lines? <A. Yes, but it 
all requires the same service. 


Exam. LaRoe: I do not want the general 
nature of my inquiry to be misunderstood or its 
purport to be misunderstood. Of course, we al- 703 
ways find in a large State, different transporta- 
tion conditions in various parts of the State, and 
I think it will be generally understood that the 
traffic conditions along the Hudson river, and 
along the Mohawk river, are much more favor- 
able, for example, than they are in the mountain 
regious in other sections of the State, but I take yoy 
it that the water level route is used quite as much 
by interstate travelers as by intrastate travelers, 
and my questions were merely intended to de- 
velop the question whether, taking the territory 
as a whole, the conditions in southern New York, 
for example, were more favorable than in north- 
ern New Jersey, northeastern Pennsylvania, or 
whether the transportation conditions in eastern 
New York were more favorable than western 
Massachusetts and western Connecticut. JI was 
trying to ascertain whether there was any rea- 
son for excepting the State of New York as a 
whole from a general level of rates than was ap- 
plicable throughout a given territory. 


705 


144 


706 : Paper 4 
The Witness: Might I say that doubtless Judge 
Hale’s reference to the water-level route applies 
to our main line, and the operating conditions on 
other parts of our railroad within New York State 
do not differ materially from the lines he men- 
tioned so far as grades, etc., are concerned. 
707. +. (By Mr. Hale). That is quite true of your 
Adirondack division? A. That is true of the Penn- 
sylvania division. 


Q. (By Mr. Paulding). And the Boston and Al- 
bany? A. Yes, sir. 


Q. (By Mr. Griffin). The operating conditions 
over your main line are more favorable than the 
other lines in surrounding states? In that par- 
ticular territory, because of lack of grades. 


708 


Q. The population, in number, too? <A. Yes, sir, 
but the population requires service. 


Q. (By Exam. LaRoe.) Is not the route from 

New York to Chicago generally regarded as the 

709 best one from the company’s point of view? A. 
We naturally feel that it is. 


Q. (By Mr. Paulding.) Well, now, what is the 
fact, Mr. Vosburgh—is it not that on trains 
leaving New York for western points, whether 
within or without the State of New York on any 
of these railroads excepting on one train passen- 

710 gers are accepted and do ride both interstate and 
intrastate in the same cars and on the same 
train? <A. Yes, sir. 


Q. (By Mr. Hale.) I would like in this connec- 
tion to get a little information. It may be legiti- 
mate here. What percentage, if you can tell us, 


145 


Paper 4 

of passengers on the Empire State, going west, 
have already signified their intention to go be- 
yond Buffalo by the purchase of transportation? 
A. Judge, you have picked out the one train on 
our railroad which is almost exclusively an intra- 
state train. It carries only coaches and parlor 
cars, and as I say, it is almost exclusively intra- 
state. That is not true of any other important 
train on the railroad. We have trains leaving for 
Chicago through the day, carrying sleeping cars 
to Chicago and the west, on which we handle in- 
trastate travel, and which could be used without 
the slightest difficulty in defeating the interstate 
fare, as brought out this morning in the testi- 
mony. 


Q. Now, that is a very fair answer in all re- 
spects but the one I want, namely, what percent- 
age, if there be an ascertainable percentage on 
the Empire State going west, are really inter- 
state? A. I do not think I could answer. 

Q. Is there 1 per cent? Well, I just said I don’t 
think I can tell you. 


Exam. LaRoe: Are there any further ques- 
tions of this witness? 


Q. (By Mr. Holmes.) In your line running 
from, we will say Dunkirk down toward Titus- 
ville, what was the local fare in 1907, up to the 
time the Federal order went into effect? A. I 
am not sure, I would say 214 cents a mile. 

Q. And on the line going down to Williams- 
port? A. 314 cents per mile. 

Q. During that time was there a mileage book 
sold at a less rate net than 214 cents? A. There 

ot 


711 


712 


713 


714 


715 


716 


717 


718 


719 


720 


146 


Paper 4 
was a mileage book sold in that territory at, as I 
recall it, 214 cents net. 

Q. In other words, there was $35 collected for 
a thousand mile book, with a rebate of $2.50 or 
$3.50, as the case might be? A. I think so. 

Q. You are familiar with the traffic between 
Detroit and Chicago? A. In a general way. 

@. And the rate between Detroit and Chicago 
in 1907, or we will say prior to the Federal con- 
trol, was what? <A. I do not believe I can tell you, 
Mr. Holmes. 

Q. Well, it was based on the Wabash mileage 
at any rate? A. I would not undertake to tell 
you that. 


Mr. Holmes: I would like to have the record 
show the rate over the Wabash railroad and our 
line between Detroit and Chicago on passenger 
fares, and I would like to have the mileage book 
rate, the gross and the net. 


Exam. LaRoe: What is the object of that, Mr. 
Holmes? 


Mr. Holmes: Well, the object is simply to 
show in the further proceeding of which this may 
be part, the mileage book question which was 
brought up here this morning. It has a bearing 
on the New York Central Lines. Nevertheless, I 
don’t care to come in on that. 


_ Exam. LaRoe: I prefer that we leave that to 
a subsequent proceeding. I cannot concede, if I 


correctly understand this proceeding, that the 


Commission will make any order in this case with 
regard to mileage books — that is the propriety of 
issuing them. I do not understand that to be one 


147 


Paper 4 


721 
of the issues in this proceeding. Is that your 


understanding, Mr. Paulding? 


Mr. Paulding: As part of the general case, 
Mr. Examiner, that the statute is here in New 
York as to the issuance of a two-cents mileage 
book. 


Hxam. LaRoe: You do not have any mileage 
books in effect? 


Mr. Paulding: No, and it was only as part of 
the history in the case that I put it in. What we 
are asking is the application of the Interstate 
Commerce Commission’s order, interstate to 
State rates, and that of course, includes all rates. 


Mr. Holmes: The question has a bearing on 
the net earnings of the road previous to govern- 
ment’s control, and previous to the time of the 
Interstate Commerce Commission’s order of this 
increase. 


Exam. LaRoe: Of course, our tariffs show in 
Washington what the rates are between Detroit 
and Chicago during any period that you have in 
mind. They also show what the distances are 
and what mileage books are, so we have the in- 
formation right there. 


Mr. Holmes: I have the information in connec- 
tion with this, however, and I will bring it up and 


722 


123 


file the report with you as part of these proceed- 725 


ings. 
Exam. LaRoe: (Very well. You may do that. 
Is there anything further from this witness? 


(No response. ) 


148 


726 Paper 4 
Exam. LaRoe: That is all. 


(Witness excused.) 


Wirtiam S. Katuman was thereupon called as 
a witness, and having been duly sworn, testified 
as follows: 

127 I a 

Direct examination: 

Q. (By Mr. Paulding.) What is your posi- 
tion? A. Commerce assistant to the vice-presi- 
dent, traffic department, New York Central Lines. 


(). You have been connected with the railroad 
business in New York State for a number of 
years? A. New York Central, twenty years; 
thirty years altogether. 

(). Have you had any particular experience 
with the rates in the milk and cream business in 
the State of New York and interstate in your 
locality? A. Yes, sir. 

Q. Have you made a study of that situation? 
729 A Yes, sir. 

@. And you have testified before the Commis- 
sion a number of times, upon matters particularly 
in so-called milk and cream cases?, A. 8558, yes, 
sir. 

(). The rates upon milk and cream were on Au- 
gust 26th, interstate, advanced 20 per cent in ac- 

730 cordance with the decision of the Interstate Com- 
merce Commission, were they not? <A. Inter- 
state, yes. 

Q. And intrastate, what happened? <A. No ad- 
vance —that is within New York State. 

Q. Will you in your own words give us a pic- 


728 


149 


Paper 4 
ture, if you can, of the situation in the milk and 
cream business in the State of New York, and in 
the surrounding states, interstate and intrastate? 
A. The rates on milk and cream into New York 
—and when I say milk and cream, that includes 
buttermilk, condensed milk, evaporated milk, pot- 
cheese,’ skim-milk—they are all carried in the 
same character of service —were fixed by the 
Commission in Docket No. 8558, reported in 49 
I. C. C. 418, into New York city, Hoboken, Wee- 
hawken and Jersey City, on a mileage basis, 
graded from ten miles up to 6380 miles. Of course, 
those rates were fixed by the Commission as ap- 
plicable to interstate traffic, but the New York 
Central adopted the same rates as to intrastate 
traffic into New York city at that time. The New 
York Central transports into the Metropolitan 
district, which includes, I will say, New York, 
Brooklyn, The Bronx, Hoboken, Weehawken and 
Jersey City, about 40 per cent of all the milk and 
cream that is consumed. The New York Central 
operates into the New York district, nine milk 
trains every day, 365 days a year, approximately 
160 cars, and the tonnage of the milk and cream 
is shipped in various packages, such as cans and 
bottles and so forth, but calculated into 40 quarts 
a can, the daily transportation of milk and cream 
by the New York Central is approximately 32,500 
40-quart cans on a calculated basis of bottles and 
cans. Of that 40 per cent of the total consump- 
tion in this district, about 75 per cent is intra- 
state; the other 25 per cent is interstate. The 
New York Central hauls one milk train on the 
Harlem division which is purely intrastate. An- 


38 


731 


732 


733 


134 


735 


150 


Paper 4 
other train is received from the Rutland railroad 
at Chatham, New York, all of which is interstate. 
That train has about sixteen cars in it, and it 
stops at Ogdensburg, New York, on the Rutland 
railroad, and Ogdensburg is also reached by the 
New York Central direct. That milk train picks 
up milk across the State of New York to Rouses 
737 Point, and picks up milk through Vermont, and 
also again picks up a little milk in New York 
State. The New York Central receives from the 
Central New England railroad at Beacon every 
night a train of milk, which is combined with milk 
picked up on the Hudson division south of AI- 
bany. It receives from the Delaware and Hud- 
son one train daily at Albany, all of which is in- 
trastate, originating on the Delaware and Hud- 
son between Albany and Binghamton. The other 
it receives at Troy, and that milk transported on 
that train is largely interstate, by reason of the 
movement of the train over the Delaware and 
Hudson railroad. It also receives from the UI- 
739 ster and Delaware at Kingston a milk train every 
day. That is all interstate, because it moves to 
New Jersey and is delivered at Weehawken, New 
Jersey. It originates on its own lines west of 
Albany, three milk trains a day, all of which is 
intrastate. 

The deliveries of the milk on the New York 
740 Central are at 30th street, 130th street and Mel- 
“"* rose Junction, New York city. It also delivers 
milk at White Plains, Mount Vernon, Tarrytown 
and Yonkers. Some of it is intrastate and some 
of it interstate; and one train on the river divi- 
sion of the West Shore, which moves to Weehaw- 

ken and is interstate. 


736 


151 


Paper 4 

At the time of the Commission’s decision in 
Case 8558, the net result of the adoption of those 
rates by the New York Central, as applied to in- 
trastate traffic, was a reduction in its revenue, 
but from time immemorial, rates into New York 
city have been carried on an equal zone basis via 
all intrastate and interstate routes. The New 
York Central adopted the same rates that were 
fixed by the Commission in the interstate case, 
and that condition exists to-day, with one excep- 
tion. The Commission itself stated that rates on 
milk on the Ulster and Delaware railroad should 
be properly higher than rates from points on 
other roads of origin. That is the single excep- 
tion. 

If we take the line of the Delaware and Hud- 
son railroad, it will be seen that that railroad has 
a line of railroad extending from Whitehall, New 
York, eastwardly to Castleton, Vermont, thence 
southerly to Hagle Bridge, New York. That is 
the end of the Delaware and Hudson railroad on 
its line down to Eagle Bridge. That line crosses 
the Vermont State line four times between Eagle 
Bridge and Whitehall, and from all of those 
points including Eagle Bridge that are shown in 
red circle on the map, milk is regularly shipped 
to New York. The train stops at Eagle Bridge, 
proceeds northerly to Castleton, crosses the Ver- 
mont boundary line to Whitehall and down to 
Troy, where the New York Central takes it to 
New York. That is a daily service. A farmer 
located just east of the Vermont line to-day is 
bearing a 20 per cent increase over the rates in 
effect in August, 1920, while his neighbor just 
across the line has no increase. 


741 


42 


~J 


743 


TA4 


745 


(0) 


152 


Paper 4 

(). That is an actual condition, is it? A. That 
is an actual condition. The Central New Eng- 
land railroad, from which the New York Central 
receives the same load of milk every night at Bea- 
con, opposite Newburgh—its line runs across 
the Connecticut boundary line — if it has a cream- 
ery located in Connecticut, shipping to New York, 
the farmer pays more than his neighbor just west 
of the New York State-Connecticut line. 

On the Ulster and Delaware they have higher 
rates than apply on other roads; but take the 
West Shore railroad: The West Shore railroad 
has a branch extending from Kingston down to 
Campbell Hall, forty miles, called the Wallkill 
Valley branch. About six or seven carloads of 
muk originate there every night. That milk, 
being delivered at Weehawken and being moved 
to New Jersey, pays the 20 per cent increase, but 
a farmer on the east side of the Hudson river, 
his deliveries being at New York city, bears no 
increase. 


Now, Mr. Examiner, I would lke to hand you 
a map of the railroad of New York State. 


Exam. LaRoe: Do you want this filed in the 
record? 

The Witness: Yes, sir. 

(The map was thereupon received in evidence, 
marked, ‘‘ Complainant’s Exhibit No. 11, Witness 
Kallman,’’ and is forwarded herewith. ) 


The Witness: As is shown on this map, Mr. 
Fixaminer, in colors, the lines of the railroad that 
transport milk from points in New York State 


153 


Paper 4 

to New York City, and compete with the New 
York Central Railroad — you observe the lines of 
the New York, Ontario & Western Railroad shown 
in green, running up from the state line to Delhi, 
Kidmeston, Utica, Rome and Oswego, and the lines 
of the Delaware, Lackawanna & Western Railroad 
are shown as extending from the Pennsylvania-— 
New York State boundary line up to Richfield 
Springs, Utica and Oswego. The lines of the 
Lehigh Valley Railroad extend from the New 
York State-Pennsylvania boundary lne to Cam- 
den, N. Y., North Fairhaven on Lake Ontario, 
Auburn, Geneva, Naples, Hemlock and Rochester. 
[ should have said the Delaware, Lackawanna & 
Western also has a line to Buffalo. 

@. Do you reach Syracuse with the Delaware, 
Lackawanna & Western? <A. Yes, sir; I men- 
tioned Oswego as the uttermost end of the Penn- 
sylvania Railroad, extends from the New York 
State-Pennsylvania boundary line to Buffalo. I 
am speaking now of milk traffic points of origin, 
not necessarily the ends of these railroads, from 
the Pennsylvania State line to Buffalo, and as far 
as Mayville, New York. 

I should have stated the territory of origin of 
the milk traffic of the New York Central which is 
delivered in New York City. It is received on the 
Harlem division of the New York Central, extend- 
ing from New York City to Chatham, at a poimt 
north of Brewster, about 35 miles up from New 
York. It also originates milk on the Hudson 
division north of Poughkeepsie to Albany. That 
milk is intrastate. It receives milk on its Mohawk 
division, extending from Albany to Syracuse. It 


ag 


751 


752 


753: 


(54 


755, 


759 


760 


154 


| Paper 4 

receives on the Shenango branch of the West 
Shore Railroad, extending from Syracuse to EKarl- 
ville, 40 miles. It receives milk on all of its 
stations on the Ontario and St. Lawrence divi- 
sions, north of the line from Albany to Syracuse, 
and east cf the line from Oswego to Syracuse. 
That is the great bulk of the milk traffic today. 
That extends as far as Massena Springs, New 
York, near the St. Lawrence River, where two 
ears of milk start every morning from Messina 
Springs at seven o’clock and arrive at New York, 
midnight. It also receives some milk on its main 
line west of Syracuse, to. Lyons, New York. 

The milk it receives from connecting lines are 
a car from the Lowville and Beaver River Rail- 
road at Lowville, New York; a car from the 
Albany Southern Railroad at Albany, New York; 
a car from the Mohawk Railroad at Mohawk, New 


York—the Oswego & Herkimer Railroad, I 


should have said; a car from the Norwood & 
St. Lawrence at Norwood, N. Y.; one trainload 
from the Delaware & Hudson at Albany, which 
originates on its line between Albany and Bing- 
hamton; ene trainload from the same railroad at 
Troy, which originates on its line between New 
York State and Vermont. 

As I sad at the outset, 40 per cent of the whole 
milk trade of New York is hauled into New York 
on the New York Central and of that approa- 
mately 75 per cent 1s intrastate. I also said we 
received a train from the Ulster & Delaware at 
Kingston, New York, delivered at Weehawken. 
The traffic itself requires immediate delivery upon 
arrival, and that has brought about the delivery 


155 


Paper 4 

of the milk at the Jersey railroads on the Jersey 
shore of the Hudson River, and those roads that 
do transport the milk traffic keep the ferries in 
operation at night principally for the aceeommoda- 
tion of the milk traffic, which is very extensive 
with all of them, so that the situation with the 
New York Central Railroad is that the lines on 
both sides of the Hudson River, one being an 
intrastate line, the other an interstate line, we 
charge higher rates on milk originating in New 
York State and transported over the rails 
operated by the New York Central Railroad at 
Weehawken, than we do milk originating on the 
other side of the river, transported wholly intra- 
state into New York City. All of the other Jersey 
roads, the Delaware, Lackawanna & Western, the 
New York, Ontario & Western, the Erie, the Le- 
high Valley and Pennsylvania Railroad deliver 
their milk either at Hoboken or Jersey City. 

A glance at the map will show that the roads 
that have been colored with green, red, yellow and 
blue largely reach into the same territory the 
New York Central does. 

The general rule in the sale of milk by the 
farmers today is it 1s sold and delivered at the 
ereamery. It is weighed, and the farmer’s return 
is based upon the butter fat content of the milk. 
Take a point like Camden, New York, which is 
reached by the New York Central and Lehigh 
Valley, the creamery may be located on the rails 
of the Lehigh Valley or the New York Central 
but these farmers are paid on a periodical basis, 
so that right now, even with the 20 per cent dis- 
advantage in the through rate against a farmer 


761 


765 


766 


167 


156 


Paper 4 

using an interstate route, he would not be bene- 
fited until his contract with the creamery has ex- 
pired. After that he might fight to have the 
rates continued as they are, just to draw his 
milk to the adjacent station of the New York 
Central Railroad and get the advantage of the 
20 per cent increase in rates. 


Q. (By Exam. LaRoe): So at the present time 
this difference does not — A. Does not make any 
difference whether — they are under periodic con- 
tracts, but when those contracts expire, the result 
would be in many cases that the farmers would 
draw their milk to the creameries on the New York 


768 Central, instead of to the creameries on com- 


769 


770 


peting roads. 

@. To whom does this make a difference now? 
A. The wholesale receiver, Borden Company, 
Sheffield-Slawson Company, mostly, who are the 
largest operators. They operate creameries all 
over the states of Connecticut, New York, Ver- 
mont and New Jersey, and they pay for the milk 
on the basis of the butter fat content. Whatever 
advantage has accrued from those milk adjust- 
ment rates, in my judgment they are getting the 
benefit of. 


Q. (By Mr. Paulding): Take the milk district 
in the western and southern part of the state is 
a very large district, is it not? A. That is mostly 
handled in passenger trains and baggage cars. 

Q. Some of that goes— A. In that case that 
would not be sold on that basis. The farmer 
there would elect for himself whether he would 
ship it inte Buffalo or try the New York market. 


157 


Paper 4 

Q. Which is done; are both kinds of traffic — 
A. No, the milk that supplies the cities of 
Syracuse, Rochester and Buffalo is either milk 
hauled directly into the cities by the farmer, or 
shipped in on passenger trains and baggage cars. 

@. But the farmers in that district, do they ship 
as well to Rochester, Buffalo and Syracuse as to 
the City of New York? A. Well, it would be to 
their interest if they shipped it to Buffalo and 
Rochester. They get better prices and don’t 
have to deal through the receiver. 

Q. I mean the distance itself; milk goes both 
east and south and west? A. It does and the milk 
will find the market where it gives the farmer 
the most money. 

Q@. Not only intrastate, but interstate? A. 
Interstate, both. 

(). And the fact is that today, as a matter of 
rate, the farmer living perhaps two miles west 
of the New York State line, has a distinct advan- 
tage as to rate over tne farmer living two miles 
east, over the line? A. Absolutely. I think the 
most flagrant illustration of this discrimination 
is the line of the Delaware & Hudson Railroad 
from Kagle Bridge to Whitehall, crosses the Ver- 
mont boundary lne four times. The farmer, 
depending on the advantage of his location, sub- 
jects himself to a penalty of 20 per cent. 

Q. But the milk on all of these railroads trans- 
porting milk into the city of New York, is that of 
a similar character? A. Entirely. 

Q. That is transported in solid trains? A. In 
solid trains, milk trains, and I would like to 
point out in that connection—I haven’t the 


40 


771 


712 


773 


774 


175 


776 


777 


178 


779 


780 


158 


Paper 4 
decision with me—have you the decision in 
ex parte 74? 

Q. Yes. A. The Interstate Commerce Commis- 
sion in its decision in Ex parte 74, said, page 242: 
‘¢ Milk and cream are usually carried in passen- 
ger trains, and the revenue therefrom is not in- 
cluded in freight revenue. Rates on these com- 
modities may be increased 20 per cent.’’ 

Now, with all deference to the Commission, so 
far as that statement has any application to the 
territory east of the Mississippi river and north 
of the Ohio and Potomac rivers, it is incorrect. 
The milk and cream that is carried into the larger 
cities, and in that I include New York, Boston, 


Philadelphia, Baltimore and Cincinnati, is not 


carried in passenger trains. It is carried in milk 
trains. It is true the service from the standpoint 
of speed of those trains is nearly equivalent to 
the passenger trains, but they are not passenger 
trains at all. No passengers are carried on them, 
solid milk trains. The type of the car is an in- 
sulated baggage car, suitable of refrigeration 
from heat in summer and cold in winter; but they 
are not passenger trains. However, the Inter- 
state Commerce Commission’s classification of ac- 
counts provide as a primary item 109, that rev- 
enue from milk and cream, when it is transported 
at rates per package, regardless of weight, shall 
be reported as milk revenue, and when trans- 
ported at rates per 100 pounds, shall be reported 
as freight revenue. Merely as to this milk traffic 
into these large cities in this territory, it is re- 
ported as milk revenue, not passenger revenue, 
because it is carried —98 per cent of this milk 


109 


Paper 4 


traffic, outside of passenger trains and baggage ~ 


cars 1s carried at rates per package, regardless of 
weight. 

~ Q. (By Exam. LaRoe). Then the latter part of 

the Commission’s statement is correct? <A. Is 

not included in freight revenue. Yes, that is cor- 

rect. Now, the Public Service Commission in its 

decision as to milk traffic said: 


‘* Insofar as the petition asks an increase of 20 
per cent in rates on fluid milk, cream and articles 
taking the same rates, the Interstate Commerce 
Commission treated this traffic on the same basis 
as it treated the passenger rates, because milk 
and cream are usually carried in passenger trains. 
It may be that in this state the great bulk of milk 
and cream is carried in special milk trains, but 
their equipment and movement harmonizes more 
closely with passenger operation than freight op- 
eration. Fluid milk and cream and articles tak- 
ing the same rate should, therefore, be excepted 
from the operation of this order.’’ 

I am trying to convey that was a misconception 
under which this milk and cream traffic is classi- 
fied generally. Certainly as to the large cities in 
the eastern part of the country, it is not trans- 
ported in passenger trains. It is transported in 
special milk trains. 

Q. But the carriers in Ex parte 74, you will 
recall, asked the Commission to grant a 40 per 
cent increase or whatever it was in freight rev- 
enue? A. True. 

(). Milk revenue is not freight revenue, is it? A. 
That is entirely correct, and I may say in explana- 
tion of that, there was a misunderstanding about 


731 


783 


784 


785 


786 


787 


788 


789 


790 


160 


Paper 4 
that. What they intended to apply for was a 40 
per cent increase in all rates on milk, and the ac- 
counting department did not figure in the revenue 
on the milk that was carried on rates per package. 

Q. (By Mr. Paulding). Answer this question, 
will you? The milk as brought into the City of 
New York by the railroads you have mentioned, is 
not entirely from the State of New York; some of 
it is from other states? A. Oh, no; the nearest I 
can arrive at that is this: Of the whole milk 
traffic into the New York city district, the New 
York Central hauls 40 per cent, and of that 40 
per cent, approximately 75 per cent is intrastate. 
All the rest of it is interstate. 

(). As to the roads delivering upon the Jersey 
shore, on the other side of the river, the milk 
which they deliver does not all originate within 
the State of New York? A. Oh, no; Pennsylvania 
and New Jersey. 

(J). And that takes the higher rate? A. That 
takes the higher rate. 


Mr. Paulding: That is all I have. 


Cross-examination: 


Q. (By Mr. Hale). Just one question, Mr. Kall- 
man,. about that situation up between Vermont 
and New York. You say there are three little 
patches of territory, as I understand you, in New 
York, whose stuff goes through Vermont before 
it gets to New York city? A. Yes. 

Q. Does the New York man pay under this pres- 
ent arrangement the interstate rate? A. He pays 
it on the interstate traffic. We have fourth sec- 


161 


Paper 4 
tion relief order with the Interstate Commerce 
Commission. 


791 


(). So really the State line makes no difference? - 


A. Yes, it does, because on traffic originating and 
terminating in New York State, we don’t charge 
the 20 per cent increase. 

@. In other words, you don’t think that inter- 
state commerce? A. No, sir. 

Q. Although the train goes outside of the line? 
A. That is correct. We have relief of the fourth 
section — fourth section relief from the Interstate 
Commerce Commission, but it is a situation that 
cannot continue. 

(). Is that not according to all the definitions 
we have interstate traffic? Is it not interstate 
traffic? A. Yes, but we have a fourth section 
order, traffic relief. If that case ever comes to 
trial, that won’t be continued. It is a temporary 
relief, for the purpose of putting these rates into 
effect immediately. 

Q.: (By Exam. LaRoe). I am afraid I miss the 
point there. You have fourth section relief to 
protect the lower rates to New York, interstate? 
A. Yes. 

Q. That applied where? A. Intrastate. 

(). Are your interstate rates lower than your 
intrastate rates? A. No, they are higher. 

Q. You have got me all mixed up. A. Take the 
map you have before you, Mr. Examiner, please. 
Eagle Bridge, New York, is on the line of the Dela- 
ware and Hudson, extending down from Castle- 
ton, Vermont; that is the end of the line; they 
start milk out of Hagle Bridge. They haul it 
north through Cambridge, crossing the line of 


41 


792 


795 


162 


796 | Paper 4 
Vermont to West Rupert, back across the line 
at an unnamed point twice, finally reaching Castle- 
ton, Vermont, then over Whitehall into New York 
State, then over the main line of the Delaware 
and Hudson to Troy. We have a 36 section relief 
order from the up-State Commission, granting 
797 velief from the long- and short-haul clause as to 
all rates covered by its order, and we have a 
fourth section order from the Interstate Com- 
merce Commission as to interstate traffic. If 
either one of these cases should be set for hear- 
ing, [am frank to say in my judgment either Com- 
mission would not sanction a departure from the 
798 long- and short-haul clause. HKagle Bridge is the 
end of the line, but we have the authority to do 
what we have been doing up to the present time. 

Q. Let us go back to West Rupert again. Take > 
a can of milk originating there and moving 
through Castleton to New York, the interstate 
rate from Rupert —let me start the other way 
around. That route to Castleton is a very cir- 
cuitous route. A. It is. 

Q. There is a more direct line through Cam- 
bridge? A. But that is the end of the Delaware 
and Hudson Railroad at Eagle Bridge. It wants 
to get the 100-per cent haul for itself. 

(. Yes, but as I understand it, the rate via that 
circuitous route meets the rate of the direct route 
to New York. A. No, the rate from Hagle Bridge 
is what it was on August 25, 1920. The rate from 
West Rupert, Vermont, is 20 per cent higher, 
because it is in Vermont. That situation cannot 
exist continuously. | 


799 


800 


163 


Paper 4 

@. You mean to say that you did not increase 
by 20 per cent the rate from EHagle Bridge to New 
York, via Rupert? A. I should say not. 

@. Why didn’t you? A. Because it would be 
regarded as intrastate. 

Q. Who would regard it as intrastate? A. Ido 
not know. 


Mr. Waldron: It is all interstate from Eagle 
Bridge clear to Fairhaven, inclusive, because it 
passes in and out of the State of Vermont. We 
increased all of the rates. 


Hixam. LaRoe: Then Mr. Kallman’s testimony 
will have to be corrected to that extent. 


The Witness: I am in error. 


Mr. Waldron: To Whitehall there has been no 
increase, but Fairhaven, the last station in Ver- 
mont has been increased, and all stations south 
of Fairhaven and Castleton, whether in the State 
of Vermont or in the State of New York. 


The Witness: I stand corrected. 


(. Well, Mr. Kallman, in a Shreveport case of 
this kind, it is usually necessary for the Commis- 
sion to make some finding as to who is prejudiced 
or hurt, and who is unduly preferred by such an 
adjustment as this. 

‘Tf you had to make a finding, in your own 
words as to who was really hurt by this adjust- 
ment of milk rates, who would you say was really 
hurt by the present adjustment? <A. I should say 
that the producer of milk at Whitehall in this case 
would be unduly favored. 


801 


802 


803 


804 


806 


807 


808 


809 


810 


164 


Paper 4 

‘* @. You said he did not pay the freight?’’ <A. 
I know, but he will when his contract expires with 
the receiver. 

Q. Confirming your answer to the period of the 
present contract, who will be hurt? A. As long 
as these contracts exist, I do not see how the 
farmer could claim he was injured, but as soon as 
they expire, he would be. These contracts are 
sometimes for a month, sometimes for three 
months — rarely more than three months in dura- 
tion. That is the bulk of it—not all the milk is 
sold that way, but the bulk of it is handled that 


way. 


Hixam. LaRoe: Is there anything further from 
Mr. Kallman? (No response.) 


Q. Mr. Kallman, Mr. Paulding asked you wheth- 
er the milk coming in on the Jersey shore — 
whether it came partly from New York and partly 
from other states, and you said partly from other 
states. A. It does. 

(). Is it not the fact that much or the greater 
part of it originates in New York State? A. Yes, 
perfectly true; a little originates in Pennsylvania 
and very little in Jersey. 

Q. You also made a statement which perhaps I 
misunderstood. I understood you to say that milk 
from the southern and western part of New York 
State was mainly carried in passenger cars and 
baggage cars. A. Buffalo, Rochester and Syra- 
cuse,— milk for these points. 


Q. (By Mr. Taylor) Is it not a fact that the 
Delaware, Lackawanna & Western and Erie carry 
milk in large quantities in milk trains from south- 


165 


Paper 4 

ern New York? A. Certainly, the bulk of it. 
Kivery one of the railroads reaching into Jersey 
City and Hoboken, the Delaware, Lackawanna & 
Western, the Ontario & Western, the Erie, the 
Lehigh Valley and Pennsylvania carry their milk 
into Jersey City and Hoboken in solid milk trains, 
one, two or three trains a night, and that milk that 
comes on the Pennsylvania comes from very near 
the boundary line between New York State and 
Pennsylvania. 


Q. (By Exam. LaRoe) Will you state once more 
just what milk traffic originating on the line of the 
New York Central, if any, goes to Weehawken? 
A. One train. That train starts from Kingston, 
New York, and receives there 9 or 10 or 11 cars 
from the Ulster & Delaware, all of which orignates 
in New York State, and picks up milk between 
there and Newburgh which is delivered at Wee- 
hawken. 

Q. All the rest of your milk traffic then goes 
down the east side of the river. A. But it is not 
all intrastate. 

Q. I didn’t say it was. A. The Rutland Railroad 
comes down through Vermont and part of the 
D. & H. milk. | 


Q. (By Mr. Taylor) Does milk into Rochester 
and Buffalo move to some extent from the same 
territory as milk which moves to New York City? 
A. It does, and in that case that milk there is 
shipped into Rochester on passenger trains, and 
is not handled under contract with the receivers, 
as is the case with New York City; so there the 


42 


811 


812 


813 


814 


815 


166 


816 Paper 4 
farmer would have the option of electing for 
himself where he would send his milk. 

(). And the freight rate would affect their re- 
lationship as between the shipment to Buffalo or 
Rochester and the shipment to New York? A. It 
would; 20 per cent is an item of freight rate. 


817 Q. (By Mr. Paulding) In this train to Wee- 
hawken, you did not mean to say outside of that 
one train all of the other milk into the New York 
Central comes down over the New York Central; 
lots of milk comes over the Harlem division? <A. 
Yes, sir. | 
Mr. Paulding: Now, I will formally offer the 
decision of the Interstate Commerce Commission 


in Ex Parte 74 and the order of the Commission, 
dated July 29th. 


Exam. LaRoe: We won’t file them as exhibits, 
because it 1s not necessary. 


818 


Mr. Paulding: I have before me a few copies 
of the figures that were asked for from the Long 
Island Railroad this morning. 


Hixam. LaRoe: Can you file them in exhibit 
form? 


Mr. Paulding: I can file them in exhibit form. 


819 


Hxam. LaRoe: If you will, please. Mark that 
Exhibit No. 12. 


(The statement was thereupon received in 
evidence, marked, ‘‘ Defendant’s Exhibit No. 
12, Witness Kallman,’’ and is forwarded 
herewith.) 


167 


Paper 4 
Mr. Paulding: Do I understand that Hx Parte 
74, the decision is received and is part of the 
record —is physically in evidence? 


Kixam. LaRoe: Yes, that is not necessary; we 
will understand that that is part of the record. 


Mr. Paulding: Then that completes all that I 
have to offer, with the exception of the copies of 
the exhibits. 


Exam. LaRoe: Does that complete your presen- 
tation? 


Mr. Paulding: That completes our presentation. 


Exam. LaRoe: Now, who is next? Who else 
wants to be heard? 


Mr. Clark: I have a little testimony. 


Exam. LaRoe: We will hear you next. 


JoHN ApIcKES was thereupon called as a 
witness, and having been duly sworn, testi- 
fied as follows: | 


Direct Examination: 


Q. (By Mr. Clark) Mr. Adickes, where do you 
live? A. 211 Fulton Street, Jamaica. 

Q. You have lived there how long? A. In 
Jamaica I have lived sinee 1855 —in the village 
of Jamaica. I have lived in my present residence 
18 years. 

(). Have you been interested in transit prob- 
lems and civic problems in the Borough of Queens 
for a great many years? A. I have. 

Q. For how long? A Since 1880. 


823 


824. 


825 


826 


827 


168 


Paper 4 

Q. And you have made a study of the condi- 
tions as they affect the people of Queens? A. I 
have. 

Q. During that time? A. To a certain extent. 

@. You are a member of what civic organiza- 
tion? A. lam amember of the Queens Chamber 
of Commerce, and chairman of their transit com- 


mittee; also Jamaica Board of Trade and chair- 


828 


829 


830 


man of their transit committee. 

@. Did you make a study to some extent of the 
comparative rates between places on Long Island 
and places in New Jersey, prior to this 20 per cent 
increase granted on August 26th? A. I did, in 
Jersey and points in Queensboro. 

(). Did you find that there were discriminations 
in favor of some portions of New Jersey, as 
against Long Island—some portions of Long 
Island? <A. I did, from 40 to 100 per cent. 

@. Where are the low rates in New Jersey? 
A. From Manhattan to Newark and to the towns 
adjacent to Newark. 

(). That is, Newark is the central point which 
is a focus of numerous trolley lines? A. Yes, sir. 


Q. (By Exam. LaRoe) What fares do you use 
to Newark, those of the Hudson & Manhattan or 
the railroad? A. The Hudson & Manhattan are 
the fares that show the discrimination. 

(. What line does not serve Long Island? A. 
The Hudson & Manhattan does not. 


Q. (By Mr. Clark) The Pennsylvania sells its 
tickets over the Hudson & Manhattan line? A. 
The Hudson & Manhattan gives the same service 
to New Jersey that the Interborough does to 
Queensboro from Manhattan. 


169 


Paper 4 
Q. Does the Pennsylvania in your estimation 
give the same service from points in New Jersey 


that the Long Island gives to points in Long 


Island? A. The. Long Island does not give the 
same service from its junction points with the 
Interborough Rapid Transit System at Hunter’s 
Point and Woodside Junction that the Pennsyl- 
vania and the Hudson & Manhattan give at Jersey 
City and Manhattan Transfer. 

Q. Well, because of that, did you have any- 
thing to do with instituting the movement which 
resulted in the passage last year of what is known 
as the Kar] Pette Bill? A. Yes, by a resolution of 
the Jamaica Board of Trade, a bill was prepared 
to require the Long Island Road as a part of the 
Pennsylvania System, to give the same rates — 
to give rates in Queens not to exceed rates that 
the Hudson & Manhattan and Pennsylvania gives 
to points in New Jersey. 


Mr. Clark: I would like to introduce in evi- 
dence a copy of that Karl Pette Bill, which is now 
a law in the State of New York. 


Exam. LaRoe: That will be received and filed 
without objection as Exhibit No. 18. 


(The paper was thereupon received in evidence, 
marked ‘‘ Defendant’s Exhibit No. 13, Witness 
Adickes,’’ and is forwarded herewith.) 


(). Since the increase was granted to the New 
Jersey Roads, have you had occasion to compare 
the rates charged by the Pennsylvania over its 
own lines, or over the lines of the Hudson & Man- 
hattan Railroad Company and the rates charged 

43 


831 


832 


833 


834 


835 


170 


836 Paper 4 ; 
by the Long Island Railroad to points like 
Hunter’s Point Avenue and Woodside, where it 
joins the City rapid transit system? A. I have. 
~Q. Is there still a discrimination in favor of 
New Jersey? A. There is still a discrimination 
of 20 to 8U per cent in favor of New Jersey. 

937. -«. You believe with Mr. Hunter that testified 
this morning, that a discrimination in favor of the 
towns in New Jersey is calculated to increase the 
population of those towns, as against the popula- 
tion of the towns on Long Island? A. Ido. 

Q. Owing to that fact, did you prepare a com- 
plaint which I have here a copy of, asking the 
83g Public Service Commission of the City of New 
York and State of New York for the First Dis- 
trict, to eliminate those discriminations under the 
Karl Pette Bull, and to enforce the Karl Pette 
Bill? A. I was authorized by the Queens Cham- 
ber of Commerce to appear for the —as chair- 
man of the Transit Committee to act with you. 
g39_-—Sé«(). Just: answer the question. You did file such 
a complaint? A. I did file by authority of the 
Queens Chamber of Commerce. 
Q. Would you verify this copy? A. That is a 
copy of it. 


Exam. LaRoe:. That will be marked as Ex- 
hibit No. 14. 


840 (The paper was thereupon received in evl- 


dence, marked ‘‘ Complainant’s Exhibit No. 14, 
Witness Adickes,’’ and is forwarded herewith.) 

Q. In your own residence on Long Island, and 
your large acquaintance there, have you ever 
known of any person buying an interstate ticket 


171 


Paper 4 
on the Long Island Railroad to a point outside of 
the State? A. I do not know of anybody. 

Q. Would you say from your knowledge of the 
habits of the people in Queens County, that it is 
or is not a custom for any large proportion of 
those inhabitants to buy interstate tickets on Long 
Island, for journeys outside of the State? A. 
Well, I travel considerably myself and my family 
too, and have never heard of them, or I have never 
heard of tickets being sold, or a custom made of 
tickets being sold at the Long Island depot for 
stations beyond the State of New York. 


Q. (By Exam. LaRoe) How do you buy them? 
A. Buy them from New York. 

(). How do you have your baggage cared for? 
A. My mileage book on the Long Island, or my 
fifty-trip book gives me the right to have my bag- 
gage checked at Jamaica. I have got one right 
here. If I am coming in from Utica, I have a 
ticket over the New York Central to New York, 
and. this is from New York to Jamaica. 

Q. You check your baggage on one ticket and 


travel on another? A. Oh, no; I travel on that 
too. 


Q. (By Mr. Clark) When you get to New York, 
you buy a ticket to Utica? <A. Yes. 

Q. And that is the case with the majority of 
the people who live in the Borough of Queens? 
A. Yes. 


Q. (By Exam. LaRoe) Now, this ticket appar- 
ently is good only between Jamaica and Brook 
lyn? A. It gives me the right to go to Long Isl- 
and City. 


841 


842 


843 


844 


845 


172 


846 Paper 4 

Q. You cannot get to Utica on this? A. No. 

Q. When you start your journey at Jamaica to 
oo to Utica, what do you show, the local ticket at 
Jamaica to get your baggage checked through to 
Utica? A. I buy my Utica ticket when I am in 
town. 

@. Then you show that to the Jamaica agent, 
in addition to this? A. Yes, in addition to that, 
or if I had my mileage book —we formerly used 
a mileage book. 


Q. (By Mr. Clark) Now, Mr. Adickes, the city 
rapid transit system, socalled, extends as far as 
Jamaica, does it? A. There is one line extends to 

848 the village of Jamaica. That is four miles be- 
yond the Brooklyn city line. Another division 
on Liberty avenue extends about two miles into 
the Borough of Queens, beyond the Brooklyn city 
line. What is known as the Corona avenue divi- 
sion extends into the Borough of Queens, about 
four and a half miles, perhaps five. 

849 (. That parallels the north side division of the 

Long Island Railroad? A. Yes; and another short 

division of the city rapid transit system extends 
to Astoria. 

(). I have here a copy of the map of the Bor- 
ough of Queens, which I believe was prepared by 
you. Will you examine it and state whether it 
was? A. Yes, I prepared that map. 

Q. That shows the lines of the Long Island 
Railroad? A. Yes. 

Q. It also shows the line which was made by 
the Long Island Railroad and the B. R. T. rapid 
transit company dividing the territory to which 
they would severally extend trolley lines? A. The 


850 


173 


Paper 4 
red line here shows a line that on an agreement 
between the Long Island Railroad and the Brook- 
lyn Rapid Transit, by which they divided that 
territory and by which they were never to go be- 
yond those lines. 

Q. The Long Island Railroad Company, to- 
gether with the Interborough Rapid Transit 
Company owns certain trolley lines up farther on 
Long Island? A. On the south side there are two 
trolley lines, acquired by the Interborough and 
the Long Island in about 1906. They acquired 
jointly and took control of both lines. 

Q. Since they got control of those lines, has 
the Long Island extended any trolley lines or have 
any been-projected? A. No, these lines, each had 
—under their franchises certain extensions were 
to be made, but since the Long Island has got 
control there have been no extensions made. 

Q. Now, from Jamaica to Flatbush avenue, the 
Long Island has a local service? A. Has a local 
service. 

Q. Do you know whether that was operated in 
competition with the service on the Brooklyn 
Rapid Transit Lines? A. It was operated in the 
middle eighties to compete with the Brooklyn 
Rapid Transit lines. 

Q. The fare was reduced for that purpose? A. 
Yes, sir. 

Q. The fare to-day is 11 cents from Jamaica to 
Flatbush avenue? <A. Yes, sir. 

Q. A distance of a little over nine miles? A. 
Yes. 

Q. The fare on the city rapid transit lines from 
Jamaica to Brooklyn is five cents? <A. Yes. 


44 


851 


852 


853 


854 


855 


856 


857 


858 


859 


860 


174 


Paper 4 

Q. The difference in fare does not keep the 
Long Island Railroad from filling its local trains, 
does it? A. No, their trains are loaded. In fact, 
they say they are overloaded on that division, 
which is a fact, and which would be relieved by 
them running the same service over their Long 
Island division to Long Island City or to Wood- 
side. 

Q. That is what you have been endeavering to 
have the Long Island do, to give the same service 
to Woodside and Hunter’s Point avenue, to the 
junction with the city rapid transit lines that they 
now give to Flatbush avenue, in Brooklyn? A. 
That is correct, and we were promised that by 
Mr. Peters in 1909. 

(). And they have never done it — always have 
refused to do it? A. They have refused to give 
us those local trains to Long Island City, and I 
wish to say, Mr. Examiner, that Mayor Gaynor 
appointed me on the committee known as a com- 
mittee to relieve congestion back in 1910. The 
Committee was composed of representatives from 
all of the boroughs, to make a study of some meth- 
od of relieving the congestion in the congested 
part of Manhattan, and after making that study 
for a year, I could see that Queens Borough, if it 
had the proper service, would give relief to a 
ereat many of the congested districts. As it is 
now, 70 per cent of the Borough of Queens is de- 
pending on the Long Island road for its transit. 
That portion of the borough that has a city sys- 
tem, especially on the Jamaica end, we have lower 
fares on the Long Island system beyond Ja- 
maica; everything is based on three cents a mile, 


175 


Paper 4 


a bee ; : 61 
which in my judgment is a detriment to the city 8 


—to the railroad, because of the fact that this 
Atlantic Avenue division from Jamaica to Flat- 
bush avenue is now a splendid paying proposi- 
tion, according to the reports made by former 
officials of the road, and if that rate that they 
now have in New Jersey, based on the mileage, 
was in force as this Act provides, it would give 
all of these people in the congested district a 
chance to get from any of the suburban sections 
of Queens. 


Hixam. LaRoe: The map will be marked Exhibit 
15. 


(The map was thereupon received in evidence, 
marked, ‘* Defendant’s Exhibit No. 15, Witness 
Adikes,’’ and is forwarded herewith. ) 


Cross examination: 


Q. (By Mr. Paulding) In taking the map which 
you have just put in evidence from Mr. Clark, 
you said that showed the lines of the Long Island 
Railroad Company. You did not mean it showed 
all of the lines of the Long Island Railroad Com- 
pany? A. It is an official map of the city in which 
all of the lines of the Long Island Road are laid. 

Q. Not the whole of Long Island? A. No, 
Queens Borough. 

Q. That is what I mean. Your testimony is 
confined to the Borough of Queens? <A. Yes. 

@. You do not touch the other portion of the 
Long Island Railroad? <A. No, sir. 

(). And when you said that through tickets 
were not bought from Jamaica to any points off 
of the lines of the Long Island, you confined your 


862 


863 


864 


865 


866 


868 


869 


870 


176 


Paper 4 
testimony strictly to Jamaica? <A. Not the points 
beyond Queens Borough. 

Q. In other words, you are talking about the 
rapid transit proposition of the Long Island 
Railroad Company in the Borough of Queens? 
A. I was talking of the railroad situation in the 
Borough of Queens in comparison with the same 
rates in New Jersey. 

Q. Chiefly with the Hudson and Manhattan? A. 
Oh, no; the Pennsylvania picks up its passengers 
at Jersey City from the Hudson tube and also by 
ferry. 


Re-Direct Examiniition: 


Q. (By Mr. Clark) As a matter of fact, does the 
Pennsylvania have any great local business to the 
Pennsylvania station? A. Well, the statistics 
show that there were only — at the reports made 
to the Queens Chamber of Commerce showed that 
in 1915-1916 report to the Public Service Commis- 
sion showed that the Pennsylvania passengers in 
and out of the Pennsylvania depot were about 
five millions. 

(). Through and local passengers? <A. Yes, sir, 
through and local passengers. That same year 
the Long Island had out of the Pennsylvania sta- 
tion, by this report, thirteen millions of passen- 
gers, 

Q. As a matter of fact, are not the fares on the 
Pennsylvania road to the Pennsylvania station 
put so high that all of the traffic is thrown in at 


the Hudson terminal? <A. Yes. 


Q. A difference of twelve cents on the local 
fares— one way fares? A. Before the 20 per cent 


177 


Paper 4 

increase went into effect, a round trip ticket from 
the Pennsylvania station to Newark, if I remem- 
ber right, was 64 cents, but to get to Newark, if 
you wished to go that way direct, you could go, 
one who used the Hudson and Manhattan tickets, 
would only cost 33 cents for the round trip from 
Sixth avenue and Thirty-third street, one block 
away —that could be bought for thirty-three 
cents. If you wanted to go in by way of the Penn- 
sylvania station to Newark, you bought what was 
known as a terminal ticket, costing twelve cents, 
that enabled them to avoid paying the Govern- 
ment tax—1614 cents and 12. 


Exam. LaRoe: Mr. Clark, let me suggest you do 
not get into too great detail on that. 


Mr. Clark: That is all. 


Q. (By Exam. LaRoe) Just one question. Is 
it your understanding that there is keen compe- 
tition in the matter of these commutation fares? 
That does not express my meaning exactly. Does 
the Borough of Queens, for example, compete 
actively with New Jersey and with New York 
State and with Connecticut for this commutation 
traffic for the commuters? A. For the suburban 
traffic? 

Q. Yes. A. I would say it would be an advan- 
tage for the people of Manhattan to get in Queens 
for one reason, that between Jersey City and 
Newark, practically there is a lot of meadow land, 
not suitable for residences. 

(). Aside from that, is it or is it not true that 
the communities on the Jersey side of the river 

45 


871 


872 


873 


874 


875 


178 


Paper 4 
compete with Long Island for these commuters? 
A. They do. 

(J. here is more or less rivalry between those 
communities to attract people to live within their 
respective districts. A. Yes, and they also have 
the benefit of the competition between the Penn- 
sylvania, the Erie, the Delaware, Lackawanna & 
Western and the Jersey Central, which we don’t 
have in Queens Borough, outside of the city’s 
rapid transit system. 

@. Do you think that that competition is suffi- 
ciently keen, so that a shght difference in the 
fares makes quite a difference. A. I am quite 
positive that it does make a difference in the de- 
878 velopment of Queens Borough. 


877 


HKxam. LaRoe: Is there anything further of 
this witness? 


(No response.) 


Exam. LaRoe: Is there anything further now? 


879 Mr. Clark: I had some tables prepared. I tele- 
graphed the Interstate Commerce Commission 
and asked whether the Long Island had put in 
any application. I received word they had not. 
I have a man working up fares. Perhaps he is 
through with some tables, showing the compara- 
tive rates. 


880 Exam. LaRoe: We will give you permission to 
file later tables of comparative rates on Long Is- 
land passenger fares, with fares on lines in New 
Jersey, if that is what you have in mind. 


My. Clark: Yes; also I had a table which shows 
various fares on the Long Island Railroad, which 


179 


Paper 4 
range all the way from one cent to three cents a 881 
mile. I would like to file that, to show the injus- 
tice of the accrual if the straight 20 per cent in- 
crease was granted. 


Exam. LaRoe: I think there will be no objection 
to filing that later. Now, do you have anything 
further? : 


Mr. Clark: That is all I have. 


882 


Exam. LaRoe: It is going to be desirable to get 
this case submitted as soon as possible, in order 
that the Commission may take an early action as 
is practicable. Do you desire to file briefs in this 
case? 


| 883 
Mr. Clark: I would like to file a brief. 
Mr. Victory: The City would also like to file a 
brief. 
Mr. Paulding: I would like an opportunity, and 
I will do it in a very short time. 
884 


Hixam. LaRoe: Do the parties desire oral argu- 
ment before the Commission in Washington? 

Mr. Hale: The Public Service Commission 
would lke to be heard orally through counsel. Of 
course, there is a fundamental issue here, which 
you can readily understand, Mr. Examiner. I 
want the record clear on one point, and that is 
that neither the New York Central nor any other 885 
railroad represented here has made any applica- 
tion to the Public Service Commission to increase 
any of these rates on any other basis whatever. 
If there is any misunderstanding on that point, I 
will eall Mr. Paulding as a witness. 


886 


887 


888 


889 


180 


Paper 4 
Exam. LaRoe: That is your understanding, is 
it not, Mr. Paulding? 


Mr. Paulding: That is perfectly true. I will 
add simply this, that at the hearing before the 
Public Service Commission in August, upon an 
application of the railroads, Mr. Willard, who 
was the only oral witness called by the railroads, 
laid a great deal of stress on the need of the rail- 
roads for additional revenue. 


Exam. LaRoe: How soon can we get briefs 
ready? Will 20 or 30 days suffice? 


Mr. Paulding: Yes, sir, ten days. 


Exam. LaRoe: Can you get them ready by the 
first of October, Mr. Clark? 


Mr. Clark: I think so, yes. 


Exam. LaRoe: Will that suffice for you, Mr. 
Paulding? 


Mr. Paulding: Yes. 


Exam. LaRoe: Let the record show that all 
briefs will be due the first of October, and that 
there will be no reply briefs. Those will be final 
briefs. There will be no proposed report issued 
in this case. In other words, the report, when it 
comes out, will be the final decision of the Com- 
mission. I shall try to arrange for oral argument 
soon after the 1st of October, and you will be 
duly notified as to the exact date later. 

All statements and other matter for which per- 
mission has been given to be filed in this record, 
must be received in our office at Washington not 
later than one week from today. 


181 


Paper 4 
Please be sure that counsel are furnished with 
copies of anything that has been or will be sub- 
mitted. If there is nothing further, the hearing 
is closed. 


Mr. Mullen: May I ask that the appearance for 
the Public Service Commission, First District, be 
noted, and that they be given notice of the oral 892 
argument? My name is John A. Mullen. 


Hixam. LaRoe: Yes. The hearing is closed. 


(Whereupon at 4:20 o’clock p. m., September 
13th, 1920, the hearing of the above entitled mat- 
ter was closed.) 


46 ‘eles 48 803 


894 


895 


182 


PAPER 5 
INTERSTATE COMMERCE COMMISSION 


In the Matter of Rates, Fares, and 
Charges of THz New York Crn- 
TRAL Rar~roap Company and No. 11623. 
Other Railroad Companies in 
g97_~—sothe State of New York. 


Submitted October 11, 1920. Decided November 
1385 1920) 


Certain fares, charges, and rates required by 
State authority to be maintained by the 

} respondents within the State of New York 
898 found to be lower than the corresponding 
interstate fares, charges, and rates author- 
ized by the order in Ex Parte 74, Increased 
Rates, 1920, 58 I. C. C., 220, and to be unduly 
prejudicial to interstate passengers and ship- 
pers, unduly preferential of intrastate passen- 
gers and shippers, and unjustly discrimina- 


899 tory against interstate commerce. 


John E. Benton, for National Association of 
Railway and Utilities Commissioners. 


Charles D. Newton and Edward G. Griffin, for 
the state of New York; Ledyard P. Hale and 
Joseph A. Kellogg, for New York State Public 

900 Service Commission, Second District; Terence 
Farley for New York State Public Service Com- 
mission, First District; Fred W. Putnam, for 
Minnesota Railroad & Warehouse Commission; 
R. Hudson Burr and James E. Calkins, for Rail- 
road Commission of Florida; Morton T. Culver, 
W. HE. Trauimann, A. D. Rodenberg, and H. M. 


183 


Paper 5 

Slater for Illinois Public Utilities Commission; 
A. H. Helm and W. L. Huggins, for Court of 
Industrial Relations, State of Kansas; J. H. Hen- 
derson, for State of Iowa; Hugh LaMaster, for 
State Railway Commission of Nebraska; Dwight 
M. Lewis, for Board of Railroad Commissioners 
of lowa. 


John Holley Clark, Jr., for Chamber of Com- 
merce of the Borough of Queens; John Adikes, 
for Jamaica Board of Trade. 


Alfred P. Thom, Charles C. Paulding, Francis 
I. Gowen, John C. Bills, W. S. Bronson, Clyde 
Brown, N. S. Brown, George F. Brownell, E. G. 
Buckiand, and R. V. Fletcher, for respondent 
carriers. 


Report oF THE CoMMISSION 


Forp, Commissioner: 


In pursuance of our findings in Ex Parte 74, 
Increased Rates, 1920,'58 I. C. C., 220, we author- 
ized within a region that includes the State of 
New York an increase of 40 per cent in the inter- 
state freight rates; 20 per cent in the interstate 
passenger fares, baggage charges, and rates on 
milk and cream; and also a surcharge amounting 
to 50 per cent of the charge for space in sleeping 
and parlor ears, to accrue to the rail carriers. 

Thereupon the steam railroad companies serv- 
ing the State of New York made formal applica- 
tion to the Public Service Commission of the State 
of New York, Second District, for permission to 
file effective on five days’ notice, tariff supple- 
ments providing increases in the rates, fares, and 


901 


902 


903 


904 


905 


906 


907 


908 


909 


910 


184 


Paper 5 
charges applicable to intrastate traffic in the State 
of New York corresponding with those authorized 
in our report. So far as the application related 
to rates and charges for the transportation .of 
freight except milk it was granted by the Public 


Service Commission, by an order entered August 


19, 1920, and the increases became effective 
August 26, 1920, contemporaneously with the in- 


-ereases in interstate rates. But so far as’ it 


related to passenger fares, sleeping-car and par- 
lor-car fares, baggage charges, and rates on milk 
and cream, the application was denied by the Pub- 
lic Service Commission. Thereafter the principal 
steam railroads serving the State of New York 
filed with us a petition for relief in accordance 
with the provisions of section 13 of the interstate 
commerce act. A hearing upon the petition has 
been held, and the views of parties in interest 
have been presented to us on brief and by oral 
argument. 

This case raises again the question whether in 
regulating interstate commerce, under authority 
reposed in us by Congress, we have incidentally 
the power of regulating intrastate commerce so 
far as it affects interstate commerce. In the 
Shreveport Case, 23 I. C. C. 31, we held that we 
did possess that power by act of Congress, and 
we pointed out: 


‘‘ Congress passed this act with full knowl- 
edge and profound appreciation of those de- 
cisions of the Supreme Court in which it had 
been held that state commerce was that 
wholly within a state ‘and not affecting 
interstate commerce,’ as is fully shown by 
the Cullom report of 1886, out of which grew 
the act to regulate commerce.”’ 


185 


Paper 5 

The position we took was sustained by the 
United States Supreme Court, and the principle 
on which we acted then continues to be our guide. 
But since then the general obligation resting upon 
us to exercise control over intrastate commerce 
so far as it affects interstate commerce has been 
put in the form of a mandate by section 13 of the 
interstate commerce act, as amended by the 
transportation act, 1920.” 


“Sec. 13 (3). Whenever in any investigation under the provi- 
sions of this Act, or in any investigation instituted upon petition 
of the carrier concerned, which petition is hereby authorized to be 
filed, there shall be brought in issue any rate, fare, charge, 
classification, regulation, or practice, made or imposed by 
authority of any State, or initiated by the President during the 
period of Federal control, the Commission, before proceeding to 
hear and dispose of such issue, shall cause the State or States 
interested to be notified of the proceeding. The Commission may 
confer with the authorities of any State having regulatory juris- 
diction over the class of persons and corporations subject to this 
Act with respect to the relationship between rate structures and 
practices of carriers subject to the jurisdiction of such State 
bodies and of the Commission; and to that end is authorized 
and empowered, under rules to be prescribed by it, and which 
may be modified from time to time, to hold joint hearings with 
any such State regulating bodies on any matters wherein the 
Commission is empowered to act and where the rate-making 
authority of a State is or may be affected by the action taken by 
the Commission. The Commission is also authorized to avail 
itself of the co-operation, services, records, and facilities of such 
State authorities in the enforcement of any provision of this Act. 

(4) Whenever in any such investigation the Commission, after 
full hearing, finds that any such rate, fare, charge, classification, 
regulation, or practice causes any undue or unreasonable advan- 
tage, preference, or prejudice as between persons or localities 
in intrastate commerce on the one hand and interstate or foreign 
commerce on the other hand, or any undue, unreasonable, or 
unjust discrimination against interstate or foreign commerce, 
which is hereby forbidden and declared to be unlawful, it shall 


prescribe the rate, fare, or charge, or the maximum or minimum, * 


or maximum and minimum, thereafter to be charged, and the 
classification, regulation, or practice thereafter to be observed, 
in such manner as, in its judgment, will remove such advantage, 
preference, prejudice, or discrimination. Such rates, fares, 
charges, classifications, regulations, and practices shall _ be 
observed while in effect by the carriers parties to such proceeding 
affected thereby, the law of any State or the decision or order of 
any State authority to the contrary notwithstanding. 


47 


911 


912 


913 


914 


916 


917 


918 


919 


920 


186 


Paper 5 7 

It has been urged in opposition to the applica- 
tion of this principle to the pending case that such 
incidental jurisdiction as we may possess over 
intrastate rates is contingent upon proof that dis- 
crimination exists affecting particular persons or 
localities. But inasmuch as the basis of our juris- 
diction 1s our power to regulate interstate com- 
merece, it follows that the decisive factor is 
whether the rates under consideration injuriously 
affect interstate commerce. It is no answer to 
this to say that if this conclusion be admitted it 
may have the effect of completely displacing State 
jurisdiction over State commerce. There may 
be eases in which intrastate rates affect interstate 
commerce injuriously in ways so manifest as to 
make them subject to our control. There may be 
eases in which the connection of intrastate rates 
with the movement of interstate commerce is so 
remote and unimportant that we may properly 


disregard it. But in every case which puts in 


question intrastate rates, the decisive factor 1s 
whether or not they affect interstate commerce 
injuricusly to a considerable extent. If they do 
they are brought under our jurisdiction and made 
subject to our control, even although the whole 
rate structure of a State should be involved. 

It has not happened heretofore that we have 
had occasion to make such an extensive exercise 
of our authority as is now contemplated, and we 
could not be moved to do so save by the most 
cogent reasons. Such reasons have been supplied 
by the situation in which the transportation inter- 
ests of the country were placed and the action 
taken by Congress to relieve that situation. 


187 


Paper 5 921 


Our findings in Increased Rates, 1920, supra, 
were responsive, as the report shows, to legisla- 
tion enacted by the Congress as part of the trans- 
portation act, 1920, approved February 29, 1920, 
now incorporated in the interstate commerce act 
as part of section 1lda thereof, paragraphs 2 and 
3) reading as follows: we 

‘¢(2) In the exercise of its power to pre- 
scribe just and reasonable rates the Commis- 
sion shall initiate, modify, establish or adjust 
such rates so that carriers as a whole (or as 
a whole in each of such rate groups or terri- 
tories as the Commission may from time to 
time designate) will, under honest, efficient 993 
and economical management and reasonable 
expenditures for maintenance of way, struc- 
tures and equipment, earn an aggregate an- 
nual net railway operating income equal, as 
nearly as may be, to a fair return upon the 
aggregate value of the railway property of 
such carriers held for and used in the service 
of transportation: Provided, That the Com- 
mission shall have reasonable latitude to 924 
modify or adjust any particular rate which 
it may find to be unjust or unreasonable, and 
to prescribe different rates for different sec- 
tions of the country. 

““(3) The Commission shall from time to 
time determine and make public what per- 
centage of such aggregate property value 
constitutes a fair return thereon, and such g95 
percentage shall be uniform for all rate 
groups or territories which may be desig- 
nated by the Commission. In making such 
determination it shall give due consideration, 
among other things, to the transportation 
needs of the country and the necessity (under 
honest, efficient and economical management 


926 


927 


928 


929 


930 


188 


; Paper 5 

of existing transportation facilities) of en- 
larging such facilities in order to provide the 
people of the United States with adequate 
transportation: Provided, That during the 
two years beginning March 1, 1920, the Com- 
mission shall take as such fair return a sum 
equal to 5144 per centum of such aggregate 
value, but may, in its discretion, add thereto 
a sum not exceeding one-half of one per cen- 
tum of such aggregate value to make provi- 
sion in whole or in part for improvements, 
betterments or equipment, which, according 
to the accounting system prescribed by 
the Commission, are chargeable to capital 
account. ”’ 


In accordance with these statutory provisions 
we designated four rate groups, one of which em- 
braces the territory bounded on the west by the 
Mississippi river and on the south by the Ohio 
river and the main line of the Norfolk & Western 
Railway; and we authorized increased rates, 
fares, and charges that were designed to enable 
the carriers as a whole in that rate group, ‘‘ under 
honest, efficient, and economical management and 
reasonable expenditures for maintenance of way, 
structures, and equipment,’’ to earn an aggregate 
annual net railway operating income equal, as 
nearly as may be, to 514 per cent upon the aggre- 
gate value of the railway property of such ear- 
riers in that group, plus one-half of 1 per cent of 
that aggregate value for improvements, better- 
ments, or equipment, chargeable to capital 
account. 

Congress has taken, as the basis for determin- 
ing a fair return for the railroads, the aggregate 
value of the railway properties in each group held 


189 


Paper 5 

for and used in the service of transportation. In 
making a tentative finding of the value of the rail- 
way properties in each group, for the purposes of 
our report, we included all the railway property of 
each carrier held for and used in the service of 
transportation. This should not be construed as 
holding that jurisdiction over intrastate rates and 
fares has been taken away from the states and 
reposed in us. We find nothing in the law to indi- 
eate that such was the intent of Congress. But 
Congress has directed that we allow rates that 
will yield in the aggregate a return of 514 or 6 
per cent upon the value of the railway property 
in each of the groups. There can be no doubt of 
the power of Congress to devise and provide for 
carrying into effect a plan for assuring to the na- 
tion’s interstate railroads a fair return upon the 
value of their property; and the full control by 
Congress of this matter is not to be denied on 
the ground that the carriers’ aggregate earnings 
are a commingling of intrastate revenue and in- 
terstate revenue. In The Minnesota Rate Cases, 
230 U.S., 399, the Supreme Court said: 


‘¢ This reservation to the States manifestly 
is only of that authority which is consistent 
with and not opposed to the grant to Con- 
gress. There is no room in our scheme of 
government for the assertion of state power 
in hostility to the authorized exercise of Fed- 
eral power. The authority of Congress ex- 
tends to every part of interstate commerce, 
and to every instrumentality or agency by 
which it is carried on; and the full control by 
Congress of the subjects committed to its reg- 
ulation is not to be denied or thwarted by the 

48 


931 


932 


933 


934 


935 


190 


936 i Paper 5 
commingling of interstate and intrastate op- 
erations. This is not to say that the Nation 
may deal with the internal concerns of the 
State, as such, but that the execution by Con- 
gress of its constitutional power to regulate 
interstate commerce is not limited by the fact 
that intrastate transactions may have become 

937 so interwoven therewith that the effective 
government of the former incidentally con- 
trols the latter. This conclusion necessarily 
results from the supremacy of the national 
power within its appoited sphere.’’ 


The record shows that the refusal of the state 

of New York to permit the carriers to increase the 

938 rates and fares here in controversy to the extent 

approved by us is costing the railroads between 

$11,000,000 and $12,000,000 annually. In other 

words, the annual earnings of the interstate car- 

riers operating in New York are now between 

$11,000,000 and $12,000,000 less than they would 

be if the general level of rates and fares approved 

939 by us had become effective on intrastate traffic; 

and to that extent the declared purpose of Con- 

gress is defeated by a preferential basis of rates 

and fares maintained by authority of the State 
of New York. 

This proceeding presents a practical question 
which we have endeavored to deal with in a prac- 
tical way. The needs of these interstate carriers 
for revenue to enable them to provide adequate 
transportation service and facilities are immedi- 
ate and, in the interest of the public, can not be 
permitted to await the consideration in detail of 
individual fares, charges, and rates. The record 
shows that the respondent carriers perform the 


940 


heat 


Paper 5 

services here in question under substantially simi- 
lar circumstances and conditions, whether in re- 
spect of interstate or intrastate transportation ; 
and that the lower basis of intrastate fares, 
charges, and rates results in undue prejudice 
against interstate passengers and shippers and 
unjust discrimination against interstate com- 
merce. The present record warrants the findings 
hereinafter made. Those findings are without 
prejudice to the right of the authorities of the 
State of New York or of any other interested 
party, to apply in the proper manner for a mod- 
ification of our findings and order as to any fares, 
charges, or rates on the ground that the latter are 
not related to the interstate fares, charges, or 
rates in such a way as to contravene the provis- 
ions of the Interstate Commerce Act. 


PASSENGER E‘ARES. 


The record leaves no doubt as to the unduly 
preferential character of the intrastate fares and 
charges now in effect in the State of New York. 
Interstate passenger fares are in general on a 
basis of 3.6 cents per mile as maximum. Passen- 
gers traveling between points in the State of New 
York and points in other states may be required 
to pay 3.6 cents per mile, whereas passengers 


941 


942 


943 


944 


traveling within the State of New York pay only 


3 cents per mile. The basis of 3.6 cents apples 
on intrastate traffic in every state bordering on 
the State of New York. In other words, intra- 
state passengers in New York enjoy a basis of 
fares distinctly lower than those exacted of inter- 
state travelers in the same territory, often riding 


945 


946 


947 


948 


949 


950 


192 


Paper 5 

in the same. trains, and also lower than the fares 
paid by intrastate passengers in neighboring 
states. The record shows beyond question that 
there are no transportation conditions in the 
State of New York that justify lower rates or 
fares, on the whole, than those applicable in 
neighboring states, or lower than the interstate 
rates and fares between points in New York and 
points in other states. 

The situation is well illustrated by the fares be- 
tween New York City and Buffalo. Of the several 
available routes connecting these points that over 
the New York: Central is intrastate while the 
others are interstate. Exclusive of war taxes it 
appears that since August 26, 1920, the fare has 
been $14.27 over the interstate routes and $13.16 
over the New York Central, a difference of $1.11 
in favor of the passenger using the latter route. 
In the case of a passenger occupying a lower Pull- 
man berth the difference is inereased to $2.36. 
Moreover, a passenger traveling from New York 
City to a point west of Buffalo can, by buying a 
ticket to Buffalo over the New York Central and 
buying another ticket at Buffalo to his destina- 
tion, defeat the through interstate fare. Repre- 
sentatives of the carriers stated that the inevita- 
ble result of this situation would be the reduction 
of the interstate fare from New York to Buffalo 
to the level of the intrastate fare, and that this 
would tend to disrupt the entire fabric of the in- 
terstate passenger fares in the territory involved. 

Inasmuch as the excess-baggage charges are 
arranged upon a scale bearing a fixed relationship 
to passenger fares and correspondingly graded in 


193 


Paper 5 

amount, such charges are governed by the pas- 
senger fares, and any discrimination in passen- 
ger fares would necessarily involve a discrimina- 
tion in excess-baggage charges. This statement 
concerning the manner in which the baggage 
charges are determined is based upon the schedule 
of rates and charges of the carriers now on file in 
the Commission’s office. 


Rates on MiitK AND CREAM. 


The expression ‘‘ milk and cream ’’ as used 
herein includes milk, cream, skim milk, butter- 
milk, condensed milk, evaporated milk, and pot 
cheese, and for the purpose of indicating the effect 
upon interstate commerce and upon the revenues 
of carriers, of the discrimination under consider- 
ation, we give illustrations as follows: 

The New York Central Railroad Company op- 
erates nine milk trains daily into the New York 
City district, carrying 1,300,000 quarts of milk 
and cream, of which approximately 75 per cent is 
shipped over intrastate routes and approximately 
_ 25 per cent over interstate routes. 

Nine or ten carloads of milk and cream per day 
originate on the Ulster & Delaware Railroad, 
which extends from Kingston, N. Y., northwest- 
erly to Oneonta, 107 miles. The cars are delivered 
to the New York Central at Kingston and, to- 
gether with six or seven cars originating on a 
branch of the latter carrier extending southwest- 
erly from Kingston, are there formed into a milk 
train which moves to New York over the tracks 
of the West Shore line. This route runs through 
a part of the State of New Jersey, the West Shore 

49 


951 


952 


953 


954. 


955 


956 


957 


9 


ies] 


58 


194 


Paper 5 

terminals being at Weehawken, N. J., and is 
therefore an interstate route. Shipments of milk 
and cream also originate at points along the east 
side of the Hudson in territory not far distant 
from that served by the Ulster & Delaware and 
move to New York over the intrastate route of 
the New York Central along the east bank of the 
Hudson River. Cn shipments using the interstate 
route the rates charged are 20 per cent higher 
than those over the intrastate route, although 
there 1s no justification from a transportation 
viewpoint for a difference in the rates. 

Again, a milk train is operated by the Delaware 
& Hudson Railroad from Eagle Bridge, N. Y., 
which is northeast of Troy, in a northerly direc- 
tion, a distance of 52 miles, to Castleton, Vt., 
thence southwesterly to Troy, N. Y., where it is 
delivered to the New York Central. Between 
Kagle Bridge and Castleton this train crosses the 
state line three times and again shortly after leav- 
ing Castleton for Troy. All shipments received 
before the last crossing of the State line are in- 
terstate shipments, and others intrastate ship- 
ments. On milk and cream in this train which 
happens to cross a state line charges must be paid 
substantially in excess of those applying on in- 


_trastate shipments moving in the same train. 
960 


There is no doubt that shipments of milk 
and cream originating in western Vermont 
and shipped to New York City district 
over interstate routes are in direct compe- 
tition with shipments of the same commodi- 
ties originating in the eastern part of the State of 


195 


Paper 5 


New York and moving to the New York City dis- 
trict over intrastate routes. 

Furthermore, there is a substantial portion of 
the State of New York, which embraces, generally 
speaking, the central portion of the state, from 
which milk and cream may move to the New York 
City district over either interstate routes or intra- 
state routes. For the purpose of illustration we 
may refer to the line of the New York Central ex- 


tending from Albany to Syracuse with a branch 


line extending from Syracuse southeasterly to 
Harlville, and to the line of the Delaware & Hud- 
son from Binghamton to Albany. From this whole 
territory shipments of milk and cream may move 
to the New York City district over intrastate 
routes. From the same general territory, how- 
ever, shipments may move over the interstate 
routes of the New York, Ontario & Western, the 
Delaware, Lackawanna & Western, and the Le- 
high Valley railroads. Each of these roads has 
one or more points of contact with the New York 
Central’s main line between Utica and Syracuse 
and with its branches in that territory. Ship- 
ments moving over the interstate routes now pay 
charges 20 per cent higher than those charged 
for shipments from substantially the same terri- 
tory moving over intrastate routes. 

The rates on milk and cream to the New York 
City district have been considered by us at vari- 
ous times. In Milk and Cream Rates to New York 
City, 45 I. C. C., 412, we found that the interstate 
rates on this tratic were unreasonable and unduly 
prejudicial to shippers from near-by points and 
unduly preferential of shippers from distant 


961 


962 


963 


964 


965 


966 


967 


968 


969 


970 


196 


Paper 5 

points; and we prescribed a scale of mileage rates, 
in blocks of 10 miles each, for distances up to 630 
miles. "The prescribed basis was also adopted by 
the New York Central on intrastate traffic, re- 
sulting in a uniform scale of rates over interstate 
and intrastate routes. By the application of the 
20 per cent increase to interstate rates without a 
corresponding increase in intrastate rates, this 
uniformity has been destroyed. 


COMMUTATION F'aREs. 


The record contains comparatively little evi- 
denee on the subject of commutation fares, but so 
far as it goes it discloses facts in the presence of 
which we can not presume that the existing rate 
structure is Just and reasonable in its established 
relationships and that it should be adopted as the 
basis upon which a general advance should be au- 
thorized, as in the foregoing particulars. We 
shall, therefore, reserve for future consideration 
his branch of the case, and as to it we do not now 
make any finding or enter any order, but we shall 
keep the ease open for further investigation, lim- 
ited to the subject of commutation fares and com- 
mutation baggage charges in the State of New 
York as to the question whether they cause any 
undue or unreasonable advantage, preference, or 
prejudice as between persons or localities in in- 
trastate commerce on the one hand, and interstate 


or foreign commerce on the other hand, or any 


undue, unreasonable, or unjust discrimination 
against interstate or foreign commerce. 


19% 
Paper 5 


FINDINGS. 


Subject to the above reservation in the matter 
of commutation fares and commutation baggage 
charges, we are of the opinion and find that the 
increases made by the carriers under Kix Parte 
74, relating to passenger fares and baggage 
charges, and now in effect, result in reasonable 
passenger fares and baggage charges for inter- 
state transportation within the territory involved 
in this proceeding, and that the failure of the car- 
riers within the State of New York to increase 
the standard intrastate fares and charges corres- 
pondingly has resulted in the past and will result 
in the future: In intrastate fares and charges 
lower than the corresponding interstate fares and 
charges; in undue prejudice to persons traveling 
in interstate commerce within the State of New 
York and between points in the State of New 
York and points in other states; in undue prefer- 
ence and advantage to persons traveling intra- 
state in New York, and in unjust discrimination 
against interstate commerce. 

We further find that said undue prejudice and 
unjust discrimination should be removed by mak- 
ing increases in said intrastate passenger fares 
and baggage charges which shall correspond with 
the increases heretofore made as aforesaid in in- 
terstate passenger fares and baggage charges. 

We further find that the increases made by the 
earriers under Ex Parte 74, relating to space oc- 
cupied by passengers in sleeping and parlor cars, 
result in reasonable charges for the occupancy of 
such space by passengers traveling in interstate 

a0 


971 


972 


973 


974 


975 


976 


977 


978 


979 


980 


198 


Paper Hi) 
commerce in the territory involved in this pro- 
ceeding, and that the failure of the carriers within 
the State of New York to increase correspond- 
ingly the charges for like space for passengers 
traveling in intrastate commerce has resulted in 
the past and will result in the future: In intra- 
state charges lower than the corresponding inter- 
state charges; in undue prejudice to persons trav- 
eling in interstate commerce within the State of 
New York and between points in the State of New 
York and points in other states; in undue prefer- 
ence and advantage to persons traveling intra- 
state in New York, and in unjust discrimination 
against interstate commerce. 

We further find that said undue prejudice and 
unjust discrimination should be removed by mak- 
ing increases in said intrastate charges which 
shall correspond with the increases heretofore 
made as aforesaid in interstate charges. 

We further find that the increases made by the 
carriers under Ex Parte 74, relating to rates on 
milk and cream, and now in effect, result in 
reasonable rates on milk and cream for interstate 
transportation within the territory involved in 
this proceeding, and that the failure of thecarriers 
within the State of New York to increase the in- 
trastate rates on milk and cream correspondingly 
has resulted in the past and will result in the fu- 
ture: In intrastate rates lower than the corres- 
ponding interstate rates; in undue prejudice to 
shippers of milk and cream in interstate com- 
merce within the State of New York and between 


points in the State of New York and points in 


other states; in undue preference and advantage 


199 


Paper 5 
to shippers of milk and cream in intrastate com- 
merce in New York, and in unjust discrimination 
against interstate commerce. 

We further find that said undue prejudice and 
unjust discrimination should be removed by mak- 
ing increases in said intrastate rates on milk and 
eream which shall correspond with the increases 
heretofore made as aforesaid in the rates on milk 
and cream shipped in interstate commerce. 

We further find that, whether the aforesaid pas- 
senger fares, baggage charges, surcharges, or 
rates on milk and cream pertain to transporta- 
tion in interstate commerce or to transportation 
in intrastate commerce, the transportation serv- 
ices, In each instance, are performed by the car- 
riers under substantially similar circumstances 
and conditions. 


An appropriate order will be entered. 


Kastman, Commissioner, dissenting: 


I am unable to join in the decision of the ma- 
jority, because I believe it goes beyond our lawful 
power. The objection is more than technical, for 
it concerns the basic relations between the state 
and federal governments, a matter of great 
moment. 

In essence, the carriers’ position is that when 
we authorize an increase in interstate rates under 
section 15 (a) of the Interstate Commerce Act a 
corresponding increase must be made in intra- 
state rates; otherwise unjust discrimination 
against interstate commerce results which it is 
our duty under section 138 to correct. State com- 


981 


982 


983 


984 


985 


986 


987 


988 


989 


990 


200 


Paper 5 

missions may be asked to authorize the intrastate 
increases, but they need ‘be offered no evidence 
except the fact of our decision and have no real 
discretion. The carriers accept the logical conse- 
quence of this view, if I understand them cor- 
rectly, by holding that applications to the State 
commissions are in substance a matter of courtesy 
and that we could, under section 13, either upon 
complaint or upon our own motion, prescribe the 
intrastate rates desired even if no such applica- 
tions had been made. If this be so, it follows that 
we could practically at will deprive any or all of 
the states of authority over intrastate rates, for 
when such rates are once prescribed by our order 
under section 13 they ean not thereafter be 
changed without our consent. 

The record in the instant case is based upon and 
conforms to this general theory of our power, and 
it is the only theory, 1t seems to me, upon which 
the decision of the majority can in full measure 
be supported. JI am unable to believe that it is 
sound. 

The Supreme Court of the United States has 
said : 

In construing federal statutes enacted 
under the power conferred by the commerce 
clause of the Constitution the rule is that it 
should never be held that Congress intends to 
supersede or suspend the exercise of the re- 
served powers of a State, even where that 
may be done, unless, and except so far as, its 
purpose to do so is clearly manifested. Illi- 
nos Central R. R.v. Public Utilities Commis- 
ston, 245 U.S., 498, 510. 


It is in the light of this wise and salutary rule 
that we should approach the issue before us, con- 


201 


Paper 4 
struing the provisions of the act with scrupulous 
respect for State authority. It is, I think, our duty 
to conclude that when the Congress expects us to 
exercise new powers at the expense of the states, 
we shall be told to do so in plain and unmistaka- 
ble terms. 


in defining our jurisdiction, at the very begin- , 


ning of the Interstate Commerce Act, paragraph 
2 of section 1, states that the provisions of the act 
shall not apply — 

To the transportation of passengers or 
property, or to the receiving, delivering, stor- 
age, or handling of property, wholly within 
one State and not shipped to or from a for- 
elen country from or to any place in the 
United States as aforesaid. 


The language is unequivocal, and there is no 
subsequent provision which runs counter to the 
limitation. It is interstate and not intrastate 
transportation with which the act has to do. Un- 
der paragraph 4 of section 13 it is true that we 
may preseribe intrastate rates, but only for the 
purpose of removing unjust discrimination 
against interstate commerce. Plainly this power 
springs from and is merely an incident of the duty 
to regulate and protect interstate traffic. 

Turning to section 15(a), our duty to establish 
rates which will enable carriers to earn a fair re- 
turn upon the aggregate value of their railway 
property relates and is confined to interstate 
rates. Without regard to the limitation of section 
1, there is no ‘‘ clearly manifested purpose ’’ to 
extend our authority over intrastate rates, and 
certainly there is none in view of this limitation. 

OL 


ee) 
© 
i) 


993 


994 


995 


202 


996 
Paper 5 


Nor is such a conclusion inconsistent with a 
reasonable interpretation and practical applica- 
tion of this section. A rule is laid down for our 
ouldance, but our duty is confined to interstate 
rates and it is a duty merely to maintain such 
rates at the level which will yield the return de- 
sired, assuming that the states will exercise their 
own power justly and taking into consideration 
our right to correct intrastate rates which un- 
justly discriminate against interstate commerce. 
At this point we may consider for a moment 
whether or not there is reason to believe that the 
Public Service Commission of New York is  dis- 
posed to deal justly with the carriers. Following 
our decision in Increased Rates, 1920, supra, ap- 
plications were filed with that commission for au- 
thority to make like increases in intrastate rates, 
fares, and charges. With afew minor exceptions 
the freight increases sought were permitted at 
once to become effective, as was possible under 
the state statutes, without indication of approval 
or disapproval and subject to complaint or inves- 
tigation in the future. The situation was different 
as to passenger fares. By a provision of the New 
York law these are limited to a maximum of 3 
cents per mile, but the State commission pointed 
out that it could permit fares in excess of this 
1000 limit upon a showing that existing fares were in- 
sufficient to afford reasonable compensation for 

the service rendered. Notwithstanding this inti- 
mation the carriers offered no evidence and did 

not assert that the fares were insufficient, but re- 

lied upon the fact that we had permitted an in- 
erease of 20 per cent in the interstate fares. 


997 


993 


999 


203 


Paper 5 
Under the circumstances no course seemed open 
to the New York commission except to deny the 
appleation, and this it did upon the sole ground 
of lack of evidence. 

There is no basis for a belief that the New 
York commission is disposed to deal other than 
justly with the carriers, or that it would have 
been unduly exacting if they had undertaken to 
show insufficiency of compensation. Upon the 
facts before us and in a spirit of comity the car- 
riers might well be remitted to the State tribunal 
to exhaust their remedies before coming to us for 
action which will deprive the State of all author- 
ity over intrastate fares so long as our order re- 
mains in effect. In this view of the matter what- 
ever losses in revenue the carriers may have suf- 
fered are chargeable to their own default. 

But approaching the matter solely from the 
viewpoint of our own jurisdiction, it is clear, I 
think, that for such authority as we possess over 
intrastate rates we must now look to the provis- 
ions of section 13. The question at once arises 
whether by reason of this section we have an es- 
sentially different issue before us than has fre- 
quently been considered under section 3 of the 
act to regulate commerce in so-called ‘‘ Shreve- 
port cases.’’ 'The carriers assert that the issue is 
different because section 13 not only prohibits 


1001 


1002 


1003 


1004 


‘any undue or unreasonable advantage, prefer- 1995 


ence, or prejudice as between persons or localities 
in intrastate commerce on the one hand and inter- 
_state or foreign commerce on the other hand,’’ 
but also prohibits ‘‘ any undue, unreasonable, or 
unjust discrimination against interstate or for- 


1006 


1007 


204 


Paper 5 

eign commerce.’’ Their view, as I understand it, 
is that the word ‘‘ discrimination ’’ in this latter 
phrase is equivalent to the word ‘‘ burden,’’ and 
that the effect is to prohibit what was not prohib- 
ited by section 3, namely, an unduly low level of 
rates within the State which is yet not alleged or 
shown to be unduly preferential of or unduly 
prejudicial against any particular person or com- 
munity. 

This conclusion I fin'd it difficult to accept. Upon 
protest the conference committee of the Senate 
and House of Representatives struck from sec- 
tion 13 the words ‘‘ undue burden ’’ and wrote in 
their place the words ‘‘ undue, unreasonable, or 


1008 unjust discrimination,’’ which now are there. I 


1009 


iliy 


hesitate to believe, as the carriers urge that no 
change In meaning was intended or accomplished 
by this change in words. Moreover, in speaking 
of section 3 of the act to regulate commerce in the 
consideration of the original Shreveport case, the 
Supreme Court of the United States said: 


It is apparent from the legislative history 
of the act that the evil of discrimination was 
the principal thing aimed at, and there is no 
basis for the contention that Congress in- 
tended to exempt any discriminatory action 
or practice of interstate carriers affecting in- 
terstate commerce which it had authority to 
reach. (Houston East &@ West Texas Ry. 
Co. v. Umted States, 234 U. S., 342, 356). 


Surely this language is quite as broad as the 
words in section 13 to which our attention is now 
directed. 

If the issue before us is not essentially different 
from the issue which has been considered in prior 


205 


Paper 5 

‘‘ Shreveport caves,’’ it will, I think, be conceded 
that while the evidence may be ‘sufficient to justify 
action against certain intrastate fares and 
charges, it is not sufficient to justify the all-em- 
bracing action which the majority approve. This 
is indicated by the fact that the carriers have not 
seen fit to rely upon preference to persons or com- 
munities, none of which are complaining, but have 
rested their case chiefly upon the allegation that 
the intrastate rates are upon a lower level than the 
interstate and fai! to contribute their fair share 
of the railway operating income to which we have 
found that the carriers in the eastern group are 
entitled. For the reasons above stated I doubt 
our power to change State rates upon this ground. 
It falls nothing short of an appellate power to 
substitute our judgment as to the reasonableness 
of such rates for the judgment of the States. But 
assuming that we possess this power, is the ev1- 
dence sufficient to justify us in exercising it? 

Stating the question differently, is there evi- 
dence that the intrastate fares and charges in 
question are not producing their fair share of 
railway operating income and, if they are not, that 
the percentage increase desired is necessary to 
bring them to the proper level? ‘That is not, it 
seems to me, an inevitable conclusion from our 
decision in Increased Rates, 1920, supra, and in 
this connection it is desirable to understand 
clearly the purport and effect of that decision. 
We were there faced with the necessity of provid- 
ing without delay the additional revenue needed 
to bring the aggregate income of the carriers to 
the level prescribed by the act, and we adopted 

D2 


1011 


1012 


1013 


1014 


1015 


1016 


1017 


1018 


1019 


1020 


206 


Paper 5 

the expedient of authorizing horizontal percent- 
age increases in rates, fares, and charges within 
and between certain territorial groups. This ex- 
pedient was necessary, for any detailed consider- 
ation of individual rates was impracticable in the 
time available. Nevertheless, it should be noted 
that the act does not prescribe this method of in- 
creasing rates, that our duty under section 15(a) 
is a continuing duty, and that our finding was only 
that the method employed would ‘‘ result in rates 
not unreasonable in the aggregate.’’ It rested 
upon the assumption that extensive readjust- 
ment would probably be necessary. It is not 
equivalent to a finding that individual rates, fares, 
and charges, or classes of rates, fares, and 
charges, so inereased and now in effect, are just 
and reasonable. Still less does it follow as a nec- 
essary conclusion, where State authority is in- 
volved, that the passenger fares within any par- 
ticular state must be increased 20 per cent in 
order to produce their fair share of railway oper- 
ating income. But if our decision in Increased 
Rates, 1920, is not evidence of that fact, certainly 
there is no other evidence of record upon which 
such a conclusion can be based. 

No doubt it may be unnecessary that the indi- 
vidual fares and charges within the State should 
all be considered separately or that the value of 
the property used in the intrastate transportation 
should be established and the return now earned 
upon that value estimated by elaborate computa- 
fions. But J am unable to escape the conclusion 
that even if the theory of the carriers as to our 
power under section 13 be accepted, at least it 


207 


Paper 5 

should be shown, by evidence sufficient to justify 
a valid opinion, that the intrastate fares and 
charges in question are not now furnishing ade- 
quate compensation for the service rendered 
judged by the standard which the Congress has 
set forth, and that an increase of 20 per cent 1s 
necessary to this end. 

Summing the matter up, without going into 
further detail, I am of the opinion that upon the 
record berore us the decision of the majority in- 
volves the exercise of a power which goes beyond 
any ‘‘ clearly manifested purpose ’’ of the Con- 
egress, and which we ought not to attempt to exer- 
cise until it is conferred upon us in plain and un- 
mistakable terms. Nor would such a conclusion 
leave the carriers without a remedy, if they are 
prepared to bring the necessary evidence to the 
attention of the New York Commission. 


1021 


1022 


1023 


1024 


1025 


208 
1026 | Paper 5 
ORDER. 


At a general session of the Interstate Com- 
merece Commission, held at its office in Washing- 
ton, D. C., on the 13th day of November, A. D. 
1920. 

1027 
In the Matter of Rates, Fares, 

and Charges of THz New York 

CentraL Rarroap Company and }+No. 11623. 

Oruer Rarmroap CoMPANIES in 


the State of New York. 


1028 
This case being a proceeding instituted by the 
Commission upon petition filed, and having been 
duly heard and submitted by the parties, and full 
investigation of the matters and things involved 
having been had, anid the Commission, on the date 
hereof, having made and filed a report containing 
1029 its findings of fact and conclusions thereon, which 
said report is hereby referred to and made a part 
hereof : 


It 1s ordered, That the common carriers who 
are parties to this proceeding, namely, Skaneate- 
les Railroad Company; Norwood & St. Lawrence 

1030 Railroad Company; Middletown & Unionville 
Railroad Company; Grasse River Railroad Cor- 
poration; Dansville & Mount Morris Railroad 
Company and A. 8. Murray, receiver; Massena 
Terminal Railroad Company; Sterling Mountain 
Railway Company; West Shore Railroad Com- 


209 


Paper 5 
pany (The New York Central Railroad Company, 
lessee); Rutland Railroad Company; The New 
York, Chicago & St. Louis Railroad Company; 
The New York Central Railroad Company; The 
Michigan Central Railroad Company; Lehigh 
Valley Railroad Company; Fulton Chain Rail- 
way Company; The Delaware, Lackawanna & 
Western Railroad Company; Boston & Maine 
Railroad; Boston & Albany Railroad Company 
(The New York Central Railroad Company, les- 
see); The Lehigh & Hudson River Railway Com- 
pany; Fonda, Johnstown & Gloversville Railroad 
Company; Central New York Southern Railroad 
Corporation; Buffalo & Susquehanna Railroad 
Corporation; Arcade & Attica Railroad Corpor- 
ation; Prattsburgh Railway Corporation; Pere 
Marquette Railway Company; Genesee & Wyom- 
ing Railroad Company; New Jersey & New York 
Railroad Company; Grand Trunk Railway Com- 
pany of Canada; Erie Railroad Company; Cen- 
tral Vermont Railway Company; Bath & Ham- 
mondsport Railroad Company; The Staten Island 
Rapid Transit Railway Company; Lehigh & New 
England Railroad Company; The Baltimore & 
Ohio Railroad Company; The Pennsylvania Rail- 
road Company; The Long Island Railroad Com- 
pany; The New York, New Haven & Hartford 
Railroad Company; Buffalo, Rochester & Pitts- 
burgh Railway Company; Adirondack & St. Law- 
rence Railroad Company; The Ulster & Delaware 
Railroad Company; Niagara Junction Railway 
Company; New York, Ontario & Western Rail- 
a) 


1031 


1032 


1033 


1034 


1035 


210 


Paper 5 
1036 Way Company; Unadilla Valley Railway Com- 
pany; The Pittsburgh, Shawmut & Northern Rail- 
road Company and F.. 8. Smith, receiver; Marcel- 
lus & Otiseo Lake Railway Company; Lake Cham- 
plain & Moriah Railroad Company; Delaware & 
Northern Railroad Company; Wabash Railway 
Company; Napierville Junction Railway Com- 
pany; Greenwich & Johnsonville Railway Com- 
pany; The Delaware & Hudson Company; The 
Central Railroad Company of New Jersey; ‘The 
Lowville & Beaver River Railroad Company ; New 
York & Pennsylvania Railway Company; Catskill 
Mountain Railroad Corporation; Central New 
1038 {ngland Railway Company; Deer River Railroad 
Company; Dexter & Northern Railroad Com- 
pany; Glenfield & Western Railroad Company; 
Marion Railway Corporation; Middleburg & 
Schoharie Railroad Company; New York Con- 
necting Railroad Company; Raquette Lake Rail- 
way Company; and Schoharie Valley Railway 
1039 Company, according as they respectively partici- 
pate in the transportation, be, and they are 
hereby, notified and required to cease and desist 
from practicing the undue prejudice, undue pref- 
erence and advantage, and unjust discrimination, 
found in said report to exist, and to establish, put 
in force, and maintain passenger fares and bag- 
1040 gage charges for the transportation of passen- 
gers and their baggage in intrastate commerce 
within the State of New York which shall exceed 
the fares and charges of the carriers now in force 
and applicable to such transportation in amounts 


1037 


211 


Paper 5 
corresponding to the increases heretofore made jo41 
by the carriers, row in effect, under Ex Parte 74, 
referred to in said report, in said carriers’ pas- 
senger fares and baggage charges for the trans- 
portation of passengers and their baggage in in- 
terstate commerce within the State of New York 
and between points in the State of New York and 
points in other states; 1042 


It ws further erdered, That said carriers, ac- 
cording as they respectively participate in 
the transportation, be, and they are hereby, 
notified and required to cease and desist from 
practicing the undue prejudice, undue preference 
and advantage, and unjust discrimination found 1943 
in said report to exist, and to establish, put im 
foree, and maintain charges for space in sleeping 
cars and in parlor cars occupied by passengers 
traveling in intrastate commerce within the State 
of New York which shall exceed the charges of the 
carriers now in force and applicable to the occu- 
panecy of such space in said transportation in 1044 
amounts corresponding to the increases hereto- 
fore made by the carriers, under Ex Parte 74, in 
said carriers’ charges for the occupancy of lke 
space in sleeping cars and in parlor cars by pas- 
sengers traveling in interstate commerce within 
the State of New York and between points in the 
State of New York and points in other states; jo45 

It is further ordered, That said carriers, accord- 
ing as they respectively participate in the trans- 
portation, be, and they are hereby, notified and 
required to cease and desist from practicing the 


212 


1046 | Paper 5 
undue prejudice, undue preference and advantage, 
and unjust discrimination found in said report ‘to 
exist, and to establish, put in force, and maintain 
rates for the transportation of milk and cream 
in intrastate commerce within tthe State of New 
York which shall exceed the rates of the carriers 
1047 now in foree and applicable to such transporta- 
tion in amounts corresponding to the increases 
heretofore made by the carriers, under Ex Parte 
74, in said carriers’ rates for the transportation 
of milk and cream in interstate commerce within 
the State of New York and between points in the 
ane State of New York and points in other states; 
It ws furthered ordered, That nothing contained 
herein shall be construed as either authorizing or 
requiring said carriers, or any of them, to change 
in any manner or to any extent the commutation 
fares, or any of the commutation fares, or charges 
upon excess baggage carried in connection with 
any of the commutation fares, of said carriers 
now in foree and applicable to the transportation 
of passengers or to other transportation in intra- 
state commerce within the State of New York; 


1049 


It is furthered ordered, That this order shall 

become effective on or before December 18, 1920, 

1050 upon notice to this Commission and to the general 

public by not less than five days’ filing and post- — 

ing in the manner prescribed in section 6 of the 

interstate commerce act and remain in foree until 

the further order of the Commission in the 
premises ; 


And it is further ordered, That a copy of this 
order be served upon each of the common car- 


213 


Paper 5 


riers who are parties to said proceeding. 


By the Commission. 


[SEau] 


o4: 


GEORGE B. McGINTY, 
Secretary. 


1051 


1052 


1053 


1054 


1055 


214 


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216 


Paper 6 


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1067 
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217 
Paper 6 


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1126 


IN THE 


DISTRICT COURT OF THE UNITED 
STATES — 


127 NORTHERN DISTRICT OF NEW YORK. 


Tue State oF New York and 
Cuarues D. Newton, Personally 
and as Attorney-General of the 
State of New York, 

1128 Plantrf's, 
agamst 

Tur Unirep States and Epaar EH. 
CuarK, CuHartes C. McCuorp, 
BattrHasar H. Mryrr, Henry C. 
Hatt, Wintrurop M. Danrmts, 
Ciryp—E B. AcHxrson, Ropert KE. 

1129 Wouisey, Josepo B. Hastman, 
Henry J. Forp and Mark W. 

. Porrnr, Constituting The Inter- 

state Commerce Commission, 
Defendants. 


ORDER TO SHOW CAUSE. 


Whereas in the above entitled suit it has been 
made to appear upon the verified bill of complaint 
filed herein, a copy of which this day has been 
produced before the undersigned, Judge of this 
Court, that on the fact of said bill of complaint, 
the plaintiffs herein are entitled to an interlocu- 

228 


1130 


229 


tory injunction restraining the defendants herein 1181 


from the commission of the acts complained of 
and threatened to be committed by the defendants, 
and that the plaintiffs herein are threatened with 
irreparable damage and a multiplicity of suits, 
now on motion of said plaintiffs it is, 

Ordered, That the defendants herein, The 


United States and the Interstate Commerce Com- 1132 


mission, appear before the District Court of the 
United States for the Northern District of New 
York at the Chambers of the undersigned, the 
Judge thereof, in the City of Norwich, New York, 
on the 22d day of January, 1921, at eleven o’clock 
in the morning of that day, or as soon thereafter 
as counsel can be heard, and then and there show 


cause before the undersigned, and Hon. Martin T. 133 


Manton, Circuit Judge and Hore John ‘R. Hazel, 
aye erick Judge, convoked as a court by the under- 
signed in accordance with the statute as made 
and provided, why the interlocutory injunction 
prayed for in said bill of complaint should not 
issue and it is 


Further Ordered, That a copy of this order with 1134 


the bill of complaint attached thereto be served 
upon the Attorney General of the United States 
and upon the Secretary of the Interstate Com- 
merce Commission at least five days before the 
22d day of January, 1921, as by the statute made 
and provided. 
GEORGE W. RAY, 
United States District Judge. 


Dated, Norwich, N. Y., Northern District of New 


York this —-——— day of January, 1921. 


58 


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